What is adverse credit?

If you have adverse credit, you might have questions and concerns about your finances. So, we’ve built a helpful guide bursting with everything you need to know about the specifics of adverse credit. We’ve also made sure to include insights into how you can tackle adverse credit and pave the way towards a more financially healthy future.

What is adverse credit?

First, you might be wondering what does adverse credit mean? And what is adverse credit history? Well, adverse credit signals that an individual has negative marks on their credit report, often due to late or failed repayments.

How you might get adverse credit in the first place

It’s not only late or failed repayments which can negatively impact your credit score, as adverse credit can also be triggered by factors such as bankruptcies. There’s also the possibility of fraudulent activity or mistakes on your report which can cause adverse credit, so it’s important to always be aware of any changes to your score.

Adverse credit can lower your credit score significantly, making it much more difficult to get approved for loans or credit cards. It’s important to note that low credit scores can also be caused by too many loan applications, or even failing to build up a credit history in the first place.

How do I know if I have an adverse credit history?

To find out whether you have adverse credit, you’ll have to gain access to your annual credit report. You can do so by getting a free report from one of three main credit reference agencies:

  • Experian

  • Equifax

  • TransUnion

If you notice that your credit score is deemed poor or very poor, you likely have adverse credit. You can also check your score with your credit card lender as many issuers give borrowers a free score check.

The effects of adverse credit

Next, let’s look at some of the effects of adverse credit. With a negatively impacted credit score, it will be much more difficult to secure loans, credit cards, and even mortgages.

Adverse credit doesn’t only make home ownership more difficult, but it might also be more challenging to rent a property. Landlords will check your credit score to make sure you’re a reliable tenant and can make prompt payments. If they have doubts, they may ask you to put down a larger deposit or make higher monthly payments.

Equally, taking out a phone contract or getting car finance may be more challenging with adverse credit. With car finance, there’s a possibility you’ll be charged a higher interest rate for instance.

Can I get a loan with an adverse credit history?

You might also be wondering about loans for people with adverse credit. Well, it can be more difficult to secure a loan if you have negatively impacted credit, but this is not to say it’s impossible. Responsible direct loan lenders will conduct a credit check as part of your application process, so we can see if you’re able to pay back the money we offer. Find out more about how credit checks work in our blog.

Just because you have adverse credit and have been refused loans elsewhere, that doesn’t mean that you are ineligible for a Moneyboat short-term loan. To ensure you don’t wind up in a worse financial predicament, take a few moments to read our guide on everything you need to consider before taking out a loan.

Moneyboat’s top tips for improving your credit score

It’s more than possible to reverse adverse credit and avoid any future negative marks. So, if you’re wondering how to remove adverse accounts from your credit report, here are some top tips to help you.

  • Work towards reducing current debts: first things first, you should work towards paying off your debts by making regular repayments. Always pay your minimum payments promptly, and if you can, pay more than the minimum to get ahead.

  • Keep an eye on your credit score: as mentioned, you should remain hypervigilant of your credit score. If it declines for any reason, you can then take the necessary steps towards improving it.

  • Avoid opening too many accounts: opening various accounts over a short period may further damage your credit score. So, always make sure to proceed with care and caution.

Having an adverse credit history can have a negative impact on your finances. But, you shouldn’t feel defeated if your credit score needs some work. It’s never too late to better your financial situation, and there’s always hope for a financially healthier future.

By equipping yourself with the necessary knowledge, and implementing new healthy habits, you’ll be able to take control of your finances and avoid any future adverse credit issues.

Adverse credit FAQs

How long does adverse credit stay on file?

Depending on the severity of the issue, adverse credit can stay on your report for a long while. It could remain for up to seven years, and this increases to ten years in the circumstance of bankruptcy.

What is the fastest way to improve a credit score?

While results take time, promptly paying your bills is one of the fastest and most effective ways to boost your credit score. It’s important to set a feasible budget, stick to it, and make sure you’re able to meet your payment deadlines.

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We do all we can to bring you interesting, practical and valuable information. However, please understand the following:

  • Moneyboat.co.uk are in no way connected or affiliated with the application or affiliate links mentioned in this or any article. We do not receive any commission and are not responsible for any charges that may result from any free trials or paid subscriptions.
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Representative Example: Borrow £400 for 4 months, 4 monthly repayments of £149.37. Total repayment £597.48, interest rate p.a. (fixed) 255.5%. Representative APR 939.5%.Compare Moneyboat loans.

Warning: Late repayments can cause you serious money problems. For help, go to www.moneyhelper.org.uk.