Subprime Loan

A poor credit rating, resulting from a history of credit problems including mortgage arrears and other debts prevents access for some people to otherwise standard credit agreements from financial providers. Subprime loans (or bad credit loans) are designed specifically for individuals with a poor credit rating. While there is no official credit profile that describes a subprime borrower, most have a credit score below 660.

In the case of home owners with equity in their property, these loans are secured against the home. While interest rates and borrowing capacity varies amongst providers, subprime loans are typically in the range of $10,000 to $200,000 and can be as high as 125% of the value of the property.

Although this type of loan has typically higher interest rates than other loans, making regular payments to pay off a subprime loans can be good for repairing your credit record.