What type of lender provides loans to borrowers with poor credit histories?

Subprime lenders specifically cater to borrowers who have poor credit histories and may not qualify for loans from conventional or prime lenders. These lenders typically offer loans with higher interest rates and less favorable terms compared to traditional loans to compensate for the increased risk associated with lending to individuals with subpar credit.

This type of lending exists to ensure that those with a history of financial difficulties still have access to credit, albeit at a higher cost. Subprime loans can be essential for individuals looking to rebuild their credit scores, as making timely payments can help improve their credit standing over time.

In contrast, conventional lenders usually require higher credit scores and have stricter underwriting standards, while prime lenders only provide loans to borrowers with excellent credit histories. Hard money lenders, on the other hand, focus on real estate as collateral for the loans they provide, often for short-term purposes and typically at higher interest rates, but they do not specifically focus on borrowers' credit histories.