What are sub-prime mortgages?
Generally, sub-prime mortgages are for borrowers with credit scores under 620. Credit scores range from about 300 to about 900, with most consumers landing in the 600s and 700s. Someone who is habitually late in paying bills, and especially someone who falls behind on debts by 30 or 60 or 90 days or more, will suffer from a plummeting credit score. If it falls below 620, that consumer is in sub-prime territory. Few lenders will use the term “sub-prime” to describe you or your loan, because it’s considered bad salesmanship. You might hear the word “non-prime” or, more likely, an adjective won’t be used to describe the mortgage at all. You might receive widely differing offers from different sub-prime lenders because they have different ways of weighing the risk of giving you a loan. For that reason, it’s important to comparison-shop when your credit score is less than 620.
