 TITLE: What Does Subprime Mean? CONTENT: Who Is Considered a Subprime Borrower?\n--------------------------------------\nLenders typically identify a subprime borrower using their credit scores, which are based on the applicant's credit history as recorded in credit reports at the three national credit bureaus (Experian, TransUnion and Equifax).\nExperian defines subprime borrowers as those with a FICO® Score☉ in the fair range, between 580 and 669. FICO® Scores in this range are below average when compared with all U.S. consumers, and borrowers with fair scores are statistically more likely than the average borrower to fail to repay their creditors.\nAs of the fourth quarter of 2018, 34.8% of U.S. consumers who have credit scores fell into the subprime FICO® Score range, according to the most recent research from Experian. That's down slightly from 35.6% in the fourth quarter of 2017.\nThose figures are useful for discussion purposes, and for studying trends, but it's important to remember that subprime isn't an absolute designation.\nIn a very real sense, subprime (like \"prime,\" the term used for credit applicants with more lender-desirable credit scores) is a moving target. Each lender defines subprime and prime as they see fit, depending on their lending strategies and business goals. What's more, different lenders define subprime using different credit scoring systems, including industry-specific scores, multiple versions of the FICO® Score, VantageScore, or even custom systems designed by the lender itself.\nNo matter how a lender defines subprime, the subprime loans offered to subprime borrowers typically carry higher interest rates and fees than those offered to prime borrowers—differences that mean subprime borrowers may pay much more than their neighbors with prime credit scores. END