Adverse Credit History, What is the Definition
Any borrower can be affected by an adverse credit history, but what is the definition?
There are many financial slang terms, that can often cause confusion to borrowers, let’s begin with the Adverse Credit History Definition. Adverse Credit is a financial slang term for people that have a not so good history of repaying their credit agreements on loans, mobile phone bills, catalogues, mortgage, credit cards etc. Similar words are Bad Credit or Poor Credit, they all describe the same thing.
Those that are not so good at repaying their credit agreements
are in effect given a low credit score on their credit file, and an overall credit score which is held by credit reference agencies. Any missed repayments, defaults, insolvencies etc are recorded here as a reference to future lenders so they can decide whether you are a good candidate to lend to, the higher the credit score the better.
Lenders have different criteria’s when it comes to adverse credit, some will not under any circumstance lend money to those with adverse credit, however there are some that specifically deal with those with adverse credit. In order for them to do this, they often apply high interest rates, which can mean that they are still unaffordable to some potential borrowers.
It’s worth noting that the majority of adverse credit on your credit file is removed after 6 years,
meaning that only adverse credit options will be available to you during that time. For some receiving an adverse credit rating was due to past circumstances, such as times of unemployment wherein the borrower was simply unable to repay their debt commitments at that time. However things can swiftly change once that person is back in employment, as they are still affected by their bad credit score, even though they now earn enough to comfortably repay credit.
If you have struggled to get finance, but can prove that you can repay a loan
that may have adverse credit history, or credit card, it may be beneficial for you to apply to secure the finance that you need, if you ensure that you repay on time this will aid to improving your credit score.