Fintech Platforms Disrupt Subprime Lending with Lower APRs for Bad Credit Borrowers
Borrowers with poor credit scores—typically below 630 on the FICO scale—face limited options and exorbitant interest rates, often exceeding 30% APR. Yet fintech innovations are challenging this status quo. Specialized online lenders now leverage AI, secured loan models, and alternative risk assessment to offer comparatively lower APRs (15%-20%) to subprime customers. These rates, while high by prime-borrower standards, mark a drastic improvement over predatory payday loans with triple-digit interest.
The shift reflects a broader democratization of credit through technology. By mitigating risk via non-traditional underwriting, these platforms bridge gaps left by conventional banks. The report highlights seven leading lenders in this space, though their solutions remain a stopgap rather than a cure for systemic credit inequities.
