Adverse Credit

‘Adverse credit’ is credit slang for people with a less-than-perfect record of repaying their credit commitments. Those with ‘adverse credit’ have something seriously nasty on their credit report, such as a default, or an arrangement to pay, an insolvency, such as a bankruptcy or an IVA, or a mortgage repossession. Adverse credit can also refer to a series of late payments on a credit report.

Adverse credit will affect your credit rating and your subsequent ability to obtain credit. Such credit account information will remain on your credit report for six years from the date of account closure, after which it will automatically be removed from your file. Whilst adverse credit will continue to have a negative impact while it remains on your report, it will have less significance the older it becomes and as long as the rest of your report is clear of such negative information.

Lenders often have policy rules that say that will not lend to people with adverse credit. This is because it has been statistically proven that those with adverse credit are much more inclined to fall into arrears on credit agreements than others without adverse credit.

Some lenders specialise in lending to those with adverse credit. They are then said to be operating in the sub-prime lending market. Sub-prime lenders charge considerably more for credit to cover the additional costs of default, and of managing the accounts of those with adverse credit.

On your credit report, Adverse Credit is denoted by the monthly statuses of 2,3,6,D and AR, and also by the presence of any judgment or insolvency, whether satisfied, discharged or not.

Most forms of adverse credit are removed from a credit report automatically after six years.

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