What Is Adverse Credit?

April 7, 2023

When it comes to financial management, there are all sorts of terms, phrases and industry-related jargon floating about that you need to be familiar with in order to look after your money responsibly… but it can be quite confusing and even a little overwhelming at times, which can ultimately lead to you making poor decisions from time to time.

One of the most important concepts you should make sure you’re well versed in is the idea of adverse credit. You may also hear this referred to as bad credit and it refers to the buildup of harmful entries on your credit report, including the likes of county court judgements, defaults or late repayments.

If you do have issues such as these showing up on your credit file, you may find it harder to get approved for financial products in the future, as you’ll appear as a higher risk to lenders.

However, it’s important to note that it certainly isn’t impossible to be approved for products and there are various specialist lenders out there that tailor their services specifically towards those who are facing financial difficulties… although you may find that interest rates are higher.

How can your credit history impact you?

Whenever you apply for credit, whether you’re looking for a mobile contract, want to take out a credit card or are looking for a mortgage, lenders will use your credit history to see what sort of borrower you’re most likely to be.

They assess your past behaviour and use this to make decisions as to whether or not to lend to you and what kind of interest rates to offer you, which is why it’s so important to be as reliable as you can with payments.

If your credit file shows that you are a responsible borrower, one who always makes their payments on time, then you’re more likely to get the best deals available on the market and you’re more likely to be approved.

Each time you apply for a certain financial product, a check on your file will be carried out and this will leave a mark on the report (usually temporary). If you make several credit applications over a short timeframe, this can be a signal to lenders that you may be desperate for credit so bear this in mind.

You can make excellent use of eligibility checkers to help you see if you’re likely to be approved for credit before you apply, which can help you find the right products without having to worry that you’ll end up with a mark on your credit report.

Can you get finance with adverse credit?

In a word, yes! Even if you have struggled financially in the past (or at the moment), you may well find that you are still able to be approved for credit… as long as you choose the right provider that specialises in services of this kind. Adverse credit mortgage brokers can help you navigate the tricky landscape, further maximising your chances of success.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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