What Is Subprime Credit?

When it comes to financing your next new or used vehicle, you have several options that you can choose from. One option that you have is subprime credit. On this page, we at Ray Price Chevrolet have put together a detailed information guide about subprime credit.

Below, shoppers in the areas of Mount Pocono, Tobyhanna, Scranton, Stroudsburg, and East Stroudsburg will get a detailed overview of what subprime credit is and what it does. You'll also find some helpful tips for improving your credit score. Read ahead to learn more!

 

Subprime Credit Terminology

Before we dive into the defining subprime credit, let's get familiar with the terminology surrounding this type of credit. By knowing these terms, you can get a better understanding of the concept of subprime credit.

When dealing with subprime credit, you'll see these terms and concepts come up frequently:

  • Credit analyst - a financial expert that examines creditworthiness
  • FICO (Fair Isaac Corporation) score - number between 300 and 850 that's determined based on your creditworthiness
  • Subprime - a classification of credit borrowers with lower than average credit scores
  • Subprime credit auto loan - type of auto loan that is designed for those with low credit scores
 

Defining Subprime Credit

Subprime credit is a type of credit made to a borrower that falls into one of the following categories:

  • Has low credit ratings, like a FICO score below 600
  • High debt levels, such as from a mortgage or student loan
  • A record of delinquency, like from late or missed payments
  • Defaults or bankruptcies
  • No property or assets to use as collateral for a loan
Subprime credits make it possible for those who fall into these categories to finance purchases that they want or need, such as a home or a vehicle.
The process of taking out a subprime credit is fairly simple. All your existing credit card debts, auto loans, home mortgages, business loans, and the like are repackaged and sold to investors as asset-backed securities.
Related Post: What Kind of Credit Score Do You Need to Lease a Car?
 

How To Improve Your Credit Score

Subprime credit is a good option for those who have a credit score on the lower end of the spectrum. However, there are many ways to improve your credit score. For starters, you should go through your credit report and make sure there aren't any mistakes in it that could be making your credit score go down.

Making payments on your expenses is also a great way to improve your credit score. If you have any outstanding debt or bills, pay those off first. Then, make a calendar or reminder checklist to help you make your other recurring payments on time.

Still Wondering What Is Subprime Credit?

We at Ray Price Chevrolet are thrilled that you stopped by today to learn more about what is subprime credit. If you still have questions, don't hesitate to give us a call today. Shoppers in Mount Pocono, Tobyhanna, Scranton, Stroudsburg, and East Stroudsburg can also stop by our on-site finance center anytime to speak with one of our finance professionals about subprime credit for their next vehicle!