Sub Prime Credit

What is Sub-Prime Credit?

Sub-Prime Credit is industry slang often used by the media to describe people with a less-than-perfect record of repaying their credit commitments, in much the same way as Adverse Credit is used.

Typically it refers to those with all or any combination of the following entered onto their credit reports:

  • Late payments
  • Defaults
  • Judgments
  • Repossessions
  • IVAs

The term may also be used to describe those with little history of managing credit, as they have limited debt experience and are therefore viewed as untested and subsequently more risky by lenders.

Individuals seen as having Sub-Prime Credit will find it more difficult to take out a loan or form of finance than those with a good credit history and as such are likely to find themselves paying a higher interest rate on any credit extended to them. This is because, statistically speaking, sub-prime borrowers are more likely to default on payments than prime customers, and lenders need to cover themselves against this higher risk.


Q: How do I get out of sub-prime credit?

A: There’s no quick fix to getting out of sub-prime credit, but making credit payments on time, ensuring all the details on your credit report are correct and waiting for any negative information to drop off your report should help lenders view any future applications more favourably.

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