What is a Prime Borrower?

Prime borrowers signing a loan contract
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Prime borrowers are borrowers who are least risky of defaulting on a credit card or loan obligation. Using the FICO scale 300 to 850, prime borrowers typically have a score greater than 620. However, the actual cutoff score could be higher or lower if the lender is using a different credit scoring model.

Benefits of Being a Prime Borrower

Prime borrowers are qualified to borrow at the best (lowest) interest rate because they have such a low risk of defaulting on the loan obligation.

Prime borrowers also are more likely to have their applications approved for higher loan (or credit limit) amounts and lower down payments. A good credit score may also give a prime borrower more negotiating power with credit card and loan terms.

While prime borrowers are more likely to have their applications approved, the higher credit score doesn't mean guaranteed approval. Income, debt, and other risk factors are also considered. A prime borrower who doesn’t meet the lenders qualifications can be denied even with excellent credit.

Other Borrower Classifications

Borrowers who aren't considered prime can also be classified as super prime, borrowers with excellent credit scores, i.e. 720 and above, and subprime, which are borrowers whose credit scores fall below 620. Some credit scoring models may also define “near prime” borrowers whose credit scores aren’t quite prime but aren’t as low as subprime.

How to Become a Prime Borrower

Prime borrowers generally have fewer accounts overall, fewer new accounts, fewer credit inquiries, lower credit utilization, few or no collection accounts, and no recent delinquencies.

You can improve your credit and work your way towards becoming a prime borrower by minimizing the number of accounts you open, using only a portion of your available credit, and paying your accounts on time.

Avoid letting accounts go to collections. Even accounts that aren’t normally reported to the credit bureaus, like a utility or medical bill, can wind up with a collection agency and on your credit report if you don’t pay the account.

Borrowing When You’re Not a Prime Borrower

You can still be approved for some credit cards and loans when you're not a prime borrower. However, you may not be approved for the most favorable terms. Your credit may cause you to be approved for a lower credit limit or loan amount or higher interest rate, or both.

Having a bigger down payment with mortgages or auto loans can help lower your interest rate and allow you to purchase a house or car of a higher amount.

A cosigner who is a prime borrower can help you get approved for a larger loan amount or receive a lower interest rate. Cosigning is risky, so be careful about asking someone else to put their credit on the line for you.

Work on improving your credit before applying for the loan. If you can delay your credit card or loan, you can spend that time working to improve your credit. Order your credit reports from all three credit bureaus. Pay off any delinquent accounts and reduce your balances to build a better credit score.

Avoid opening any new accounts in the months before you apply for a loan.