Which Credit Scores Are Considered Subprime?

For many people, credit scores are a very mysterious and often misunderstood concept. An individual's credit score can vary widely from one consumer credit reporting agency to the next. In addition, what score value actually constitutes good credit is the subject of much debate, even among banks and banking professionals.

Apply now for a Car Loan Quote or read below for more information.

Many people seem to agree that a credit score somewhere in the mid-to high 700s should be considered good or excellent. However, it is with scores that are below the 700 threshold that are the subject of much confusion and debate.

For credit scores that don't quite meet a particular lender's criteria for labeling a person as "someone with good credit," the term subprime borrower was created. What makes one with good credit, or simply a subprime borrower, is really at the discretion of individual banks and lending institutions.

Some banks consider scores in the mid-to high 600s as acceptable for standard interest rate car loans, while others require scores much higher. Although there is no exact cutoff score that allows one to know, if he or she is a subprime borrower, there is a general consensus that any credit score under 600 is usually considered a bad credit score. These are the true subprime borrowers.

Your credit score is simply an indication of how you pay your debts and obligations on a monthly basis. A higher credit score, say 750 or above, is usually an indication that you have not made any late or missed payments in the last five or ten years. Likewise, a score in the mid or high 600s generally indicates one or two recent late payments. However, this is not always the case as there are other factors that can cause your credit score to vary greatly - sometimes on a daily basis.

While credit scores are important, they do not tell the whole story of a person's credit history. Most banks realize this and generally do not make lending decisions based solely on your credit score. The appearance of very low credit scores will usually cause a bank not to waste too much time in evaluating a credit application.

Subprime borrowers can still finance a car purchase. Though, they will generally have to pay higher interest rates and may be required to come up with a substantially higher down payment. In addition, people that have subprime credit may be limited as to what kind of vehicle they are able to purchase. For subprime borrowers, banks or lenders place a particularly high priority on the actual value of the vehicle to be financed.

In conclusion, there is no set credit score that can be considered poor, subprime, good or any other; the score is just a number that generalizes certain aspects of one's credit history. Banks will give much more weight and consideration to a person's actual payment performance and history. In fact, there are some banks that do not use credit scores at all when evaluating loan applications. It's all relative.