What term describes lending that is specifically designed for borrowers with low credit scores?

Subprime lending is the term that specifically describes lending aimed at borrowers with low credit scores. This type of lending recognizes that individuals with lower credit ratings may have had financial difficulties in the past but still need access to credit. Subprime loans typically come with higher interest rates compared to prime loans, reflecting the greater risk associated with lending to borrowers who may not qualify for more favorable terms due to their credit history.

In contrast, high-risk lending can be a broader category that may include various types of loans deemed risky but does not specifically focus on low credit scores. Conventional lending generally refers to loans that conform to standard criteria set by financial institutions and government-backed entities, which usually favor borrowers with strong credit histories. Personal loans encompass a wider range of lending options that may not specifically target the needs of borrowers with low credit scores, as they can also be available to those with good credit. Thus, subprime lending uniquely identifies the structured approach to accommodate those facing challenges related to their creditworthiness.