Subprime Credit Definition

"Subprime credit" is a generic term for any borrowing occurring on the subprime market. Subprime credit is usually the only type of credit available to individuals with poor credit ratings or limited credit histories. Although the specific meaning of subprime credit will vary for each creditor, in general subprime credit carries high or very high interest rates and has numerous fees and other costs.

Subprime credit often is termed "creative financing" as various unorthodox methods may be used in individual circumstances. On the flip side of the coin, subprime credit can be used to purchase automobiles, homes, or other property on credit when prime credit is not available.