You know the terms. Most simply, they mean a borrower is seen as a higher risk and qualifies for a higher interest rate on their loan. Of course, either classification is based on their FICO or other bureau credit scores, which paint only a partial picture of a financial situation….
Something else to be worried about? Why not? It’s not like you have enough on your plate already. In truth, the emerging risk shouldn’t surprise the banking industry. You’re already used to addressing NSF and OD fee class-action suits, ADA legal action, and, oh yeah, the ongoing effects of COVID-19….