Discussion
'Subprime lending' is a term applied to the loans made to ___________________________.
Answer: A
Correct answer: Those borrowers who do not have a good credit history
Subprime lending means lending to borrowers who do not meet prime credit standards - a poor repayment record, thin credit history, low income relative to the loan, or high existing debt.
Such loans carry higher interest rates to compensate for the greater risk of default. The term became familiar through the United States housing crisis of 2007–08, where subprime mortgages were packaged into securities whose ratings assumed a diversification of risk that did not survive a nationwide fall in house prices. "Debit history" is not a term in credit assessment at all.
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