1. What is Sub-prime crisis?
Borrowers are classified into two categories Prime and Sub-prime Prime borrowers are those with a good credit score Sub-prime borrowers are those with a less credit score Credit score is calculated based on number of factors like timely loan repayments (if previously taken),credit card limit. Lenders lend loans to sub-prime borrowers typically at the higher interest rates since the probability of defaults is high in such a case.
