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Risk pricing

Risk pricing is when a lender charges a higher percentage interest rate to customers considered "higher risk".  Lenders usually scale the interest rate they charge by the amount of risk the borrower presents.  Borrowers that are low risk will be issued credit with lower interest rates.  Borrowers that are high risk can expect to pay much higher interest rates.  A borrower is considered high risk when the borrower has a history of late payments, defaults, or violating credit terms.  


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