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A
sub-prime borrower is someone whose
credit history is less than desirable. A
sub-prime borrower is assumed to be a higher credit
risk than someone with average or above average
credit and because of this, is usually penalized
in some way. Charging sub-prime borrowers a higher rate of interest
than that which is charged those with better
credit is the most common type of penalty.
Historically, the sub-prime borrower is more likely
to make late credit card payments and has a higher loan
default rate, too. Those classified as sub-prime
borrowers should work to rebuild credit as this
can improve (and hopefully remove) sub-prime
borrower status. |
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