DEFINITION of 'Prime Borrower'

Someone who is considered a below-average credit risk. A prime borrower is considered likely to make loan payments on time and likely to repay the loan in full. Prime borrowers have credit files that show strong histories of using credit wisely and handling loans responsibly. As a result, their credit scores tend toward the higher end of the spectrum, albeit not as high as those of super-prime borrowers. A prime credit score usually falls somewhere in the 640 to 740 range, though the exact score that is considered prime depends on the scoring model used.

BREAKING DOWN 'Prime Borrower'

Prime borrowers usually don’t have trouble getting approved for new credit cards with favorable terms and conditions or getting approved for mortgages or other loans. Prime borrowers may not be eligible for lenders’ advertised rates, which are sometimes intended only for super-prime borrowers. If a prime borrower’s credit score slips below the range classified as prime, he or she will no longer be able to easily obtain new loans and credit cards or get the best terms. Borrowers with credit problems — those classified as subprime or near-prime —almost always have to pay higher rates.

Sometimes you will be considered a prime borrower with all three credit bureaus. In other cases, however, the information in your credit file at one bureau might translate into a credit score that makes you a prime borrower while the information in your credit file with another bureau might translate into a credit score that makes you only a near-prime borrower. Sometimes each of the three bureaus will have slightly different information about your credit history because not all creditors report to every bureau. If you had a delinquent auto loan that only got reported to TransUnion, for example, your TransUnion score might make you a near-prime borrower, while your Equifax score, which doesn’t factor that delinquent loan into your score, makes you a prime borrower. For this reason, it can pay off to contact several different lenders when shopping for a loan. Different lenders may pull your credit score from different credit bureaus and you may qualify for a better rate with one lender over another.

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