Definition
A non-prime rate is a somewhat higher interest rate that may be available for borrowers with slightly blemished credit.
Analysis
Non-prime borrowers are a subset of applicants that have blemished credit, but still show reasonable signs of creditworthiness. They may receive credit through most mainstream borrowers. They tend to pay higher interest rates to compensate for a higher risk of default.
Borrowers may be classified accordingly:
- Prime borrowers have “A Credit” (approximately 720 score and up)
- Non-prime borrowers have “B or C Credit” (630-719)
- Subprime borrowers represent substantial risk (500-629)
- Other borrowers may not qualify for most loans (350-499)
The credit score ranges above are approximate and vary among credit bureaus, credit score products and lenders. There is a large range of interest rates that may be available for non-prime borrowers. Just getting a 10 point score increase could lower an interest rate substantially.
