Who is characterized as a subprime borrower?

Who is characterized as a subprime borrower?

• A. Someone with a high credit score and stable income
• B. An individual with poor credit history and high debt
• C. A borrower with a sizable down payment
• D. A client with significant assets

Answer: (B)

A subprime borrower is defined by their creditworthiness, specifically those who have a poor credit history and high levels of debt. This group typically has a credit score that falls below the prime lending threshold, making them less favorable candidates for traditional loans. Such financial profiles indicate a higher risk to lenders, which is why these individuals often find themselves in subprime lending situations. Subprime loans often come with higher interest rates as businesses compensate for the increased risk of default associated with this borrower category. The other descriptions, such as having a high credit score, stable income, a sizable down payment, or significant assets, are characteristics typically associated with prime borrowers who are considered low risk.

A subprime borrower is defined by their creditworthiness, specifically those who have a poor credit history and high levels of debt. This group typically has a credit score that falls below the prime lending threshold, making them less favorable candidates for traditional loans. Such financial profiles indicate a higher risk to lenders, which is why these individuals often find themselves in subprime lending situations. Subprime loans often come with higher interest rates as businesses compensate for the increased risk of default associated with this borrower category. The other descriptions, such as having a high credit score, stable income, a sizable down payment, or significant assets, are characteristics typically associated with prime borrowers who are considered low risk.