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@Revelate wrote:We bastardized the term from the mortgage space, where all prime vs. subprime refers to is the FICO underwriting standard. By that traditional standard a great many cards are "subprime," but really it doesn't matter.
If a card works for you, use it. If it doesn't, don't apply. Life sucks worrying what others think.
I agree... Whether a card is "prime" or "subprime" has no effect on your credit score. With most underwriting being automatic, nobody cares whether you have a $5,000 limit CapitalOne card or a $5,000 limit American Express. A $1,000 CreditOne account looks the same as a $1,000 FNBO.
As mentioned before, though, "subprime" can be easily interchanged with "predetory." Such as First Premier or CreditOne. Don't get me wrong, they serve their purpose for those who need to rebuild and are starting from rock bottom, but they are cards that everybody, regardless of credit philosophy, urge you to get rid of as soon as you qualify for anything better. High APR (24% + ) coupled with annual fees, monthly maintenance fees, fees to speak to a human being when you call in, etc, are all indicators of Cards You Should Get Rid Of As Soon As Possible.
NFCU MR: $25K | Venture: $21K | Amex ED: $18K | NFCU CR: $18K | Amex BCE: $15K | IT #1: $17.5K | PNC Core: $15K | PPMC: $12K | Wells Fargo: $11K | Savor: 12K | Cap1 QS: $8.5K | Barclays Rewards: $7.75K | IT #2: $7.3K | MLife: $9.5K | Sportsman's Guide: $8.7K | PenFed PR: $5.5K | Elan Plat: $2.3K | TRV: $3.6K | BotW: $3K
Current FICO 8 Scores: EQ: 828| TU: 805 | EX: 814
I don't think the plastic card involved is either prime or subprime in and of itself. It comes down to the actual people or organizations involved, prime lenders and borrowers and subprime lenders and borrowers. Not subprime or prime plastic.
A subprime borrower may have a lousy FICO score, many delinquencies reporting, a thin file (short history) and borderline income that could service a debt, too much existing debt etc. They have somehow screwed the credit pooch at sometime. Subprime borrowers are invariably denied for prime products, as a general rule. As others have said, a higher risk borrower. A subprime lender is usually an organization that will take the heightened perceived risk of lending to the subprime borrower through low limits, high fees and outrageous interest rates of 30% or more. A loan shark is the ultimate subprime lender.
A prime borrower is pretty much the exact opposite of the subprime borrower. FICO scores are generally above 720, the file is thicker and more established with no (or older) delinquencies, more and varied types of credit lines etc. In other words, a low risk borrower. Prime lenders will offer the prime borrower a higher credit limit, better rewards, and lower interest rates.
Many prime lenders have products aimed at sub prime borrowers as part of an overall portfolio, but the ones to watch out for are the lenders that are strictly subprime as a business model. Credit One and First Premier come to mind in the credit card world.
The above references all types of borrowing and lending (mortgages, car loans, lines of credit etc.) It's not only about credit cards. In fact, the whole prime/subprime thing is the root cause of what happened a few years back when the country's financial system almost collapsed.
@android01 wrote:I don't think the plastic card involved is either prime or subprime in and of itself. It comes down to the actual people or organizations involved, prime lenders and borrowers and subprime lenders and borrowers. Not subprime or prime plastic.
A subprime borrower may have a lousy FICO score, many delinquencies reporting, a thin file (short history) and borderline income that could service a debt, too much existing debt etc. They have somehow screwed the credit pooch at sometime. Subprime borrowers are invariably denied for prime products, as a general rule. As others have said, a higher risk borrower. A subprime lender is usually an organization that will take the heightened perceived risk of lending to the subprime borrower through low limits, high fees and outrageous interest rates of 30% or more. A loan shark is the ultimate subprime lender.
A prime borrower is pretty much the exact opposite of the subprime borrower. FICO scores are generally above 720, the file is thicker and more established with no (or older) delinquencies, more and varied types of credit lines etc. In other words, a low risk borrower. Prime lenders will offer the prime borrower a higher credit limit, better rewards, and lower interest rates.
Many prime lenders have products aimed at sub prime borrowers as part of an overall portfolio, but the ones to watch out for are the lenders that are strictly subprime as a business model. Credit One and First Premier come to mind in the credit card world.
The above references all types of borrowing and lending (mortgages, car loans, lines of credit etc.) It's not only about credit cards. In fact, the whole prime/subprime thing is the root cause of what happened a few years back when the country's financial system almost collapsed.
You hit the nail on the head!!! This definitely sums it up in a nutshell.
@Anonymous wrote:
@android01 wrote:I don't think the plastic card involved is either prime or subprime in and of itself. It comes down to the actual people or organizations involved, prime lenders and borrowers and subprime lenders and borrowers. Not subprime or prime plastic.
A subprime borrower may have a lousy FICO score, many delinquencies reporting, a thin file (short history) and borderline income that could service a debt, too much existing debt etc. They have somehow screwed the credit pooch at sometime. Subprime borrowers are invariably denied for prime products, as a general rule. As others have said, a higher risk borrower. A subprime lender is usually an organization that will take the heightened perceived risk of lending to the subprime borrower through low limits, high fees and outrageous interest rates of 30% or more. A loan shark is the ultimate subprime lender.
A prime borrower is pretty much the exact opposite of the subprime borrower. FICO scores are generally above 720, the file is thicker and more established with no (or older) delinquencies, more and varied types of credit lines etc. In other words, a low risk borrower. Prime lenders will offer the prime borrower a higher credit limit, better rewards, and lower interest rates.
Many prime lenders have products aimed at sub prime borrowers as part of an overall portfolio, but the ones to watch out for are the lenders that are strictly subprime as a business model. Credit One and First Premier come to mind in the credit card world.
The above references all types of borrowing and lending (mortgages, car loans, lines of credit etc.) It's not only about credit cards. In fact, the whole prime/subprime thing is the root cause of what happened a few years back when the country's financial system almost collapsed.
You hit the nail on the head!!! This definitely sums it up in a nutshell.
Nail or nut? Which is it! (I agree though)...
One easy rule though: if the card has MONTHLY fees (usually after the first year) it is definitely a card aimed at subprime borrowers
Found it. Prime card. You are welcome.
@longtimelurker wrote:
@Anonymous wrote:
@android01 wrote:I don't think the plastic card involved is either prime or subprime in and of itself. It comes down to the actual people or organizations involved, prime lenders and borrowers and subprime lenders and borrowers. Not subprime or prime plastic.
A subprime borrower may have a lousy FICO score, many delinquencies reporting, a thin file (short history) and borderline income that could service a debt, too much existing debt etc. They have somehow screwed the credit pooch at sometime. Subprime borrowers are invariably denied for prime products, as a general rule. As others have said, a higher risk borrower. A subprime lender is usually an organization that will take the heightened perceived risk of lending to the subprime borrower through low limits, high fees and outrageous interest rates of 30% or more. A loan shark is the ultimate subprime lender.
A prime borrower is pretty much the exact opposite of the subprime borrower. FICO scores are generally above 720, the file is thicker and more established with no (or older) delinquencies, more and varied types of credit lines etc. In other words, a low risk borrower. Prime lenders will offer the prime borrower a higher credit limit, better rewards, and lower interest rates.
Many prime lenders have products aimed at sub prime borrowers as part of an overall portfolio, but the ones to watch out for are the lenders that are strictly subprime as a business model. Credit One and First Premier come to mind in the credit card world.
The above references all types of borrowing and lending (mortgages, car loans, lines of credit etc.) It's not only about credit cards. In fact, the whole prime/subprime thing is the root cause of what happened a few years back when the country's financial system almost collapsed.
You hit the nail on the head!!! This definitely sums it up in a nutshell.
Nail or nut? Which is it! (I agree though)...
One easy rule though: if the card has MONTHLY fees (usually after the first year) it is definitely a card aimed at subprime borrowers
It's a five-paragraph nutshell.
The term is pretty vague once you deviate from the literal prime interest rate definition.