Subprime Lending

Subprime lending involves providing loans to borrowers with weaker credit histories or higher financial risk, often at higher interest rates to compensate for the increased risk. These borrowers may have low credit scores, past missed payments, or unstable income. While subprime loans can help individuals access credit they might not qualify for otherwise, they carry a greater chance of default. This practice became prominent before the 2008 financial crisis, highlighting both its role in expanding credit and the risks associated with lax lending standards.