Adverse credit (A comprehensive guide)

In this brief blog, we are going to talk about adverse credit and how it can affect your financial life.

What is Adverse Credit?

Adverse credit is a term used to define credit that isn’t good. Adverse credit essentially means bad credit, this can include bankruptcy, county court judgements, a home repossession, individual voluntary agreements, mortgage defaults, missed credit repayments and mortgage arrears. These are all negative credit markers which will be on your credit file.

Adverse credit essentially means any bad credit on your credit file but it could also mean those with little or no credit history. You may have little or no credit history if you have just moved to the United Kingdom or maybe you have never had a credit account such as a bank or you have never registered to vote.

 In some cases, it’s a catch 24 scenario as those without credit may not be able to get credit or open credit accounts such as bank accounts but they need credit to be able to get credit. There are some Uk companies now addressing this issue. One notable company is Pockit. It is a bank account for those with bad credit or no credit.

Subprime lenders for bad credit 

If you have adverse credit you will find it hard to get credit products such as personal loans, home improvement loans, credit cards, car finance or mortgages at a desireable APR or at all as credit providers may view you as risky and find it more likely that you will default on any credit agreement.

In fact, most lenders will mention in their policies that they will not lend to people with adverse credit as those with adverse credit are statistically more likely to default on a loan, personal loan, car finance or other credit agreements.

There are specialist lenders out there who focus on the adverse credit market and will be willing to loan to consumers who fit these criteria. These are more commonly known as subprime lenders.

The interest rates they will offer will be substantially higher(These charges help to cover the additional costs of default, and of managing the accounts of those statistically more likely to miss payments) and you may need to use a broker to find these sort of lenders. E.g a bad credit mortgage broker may be able to assist you in finding a mortgage lender willing to lend to you if you have been declared bankrupt or have had a home repossession in the past. 

When you have adverse credit you will also notice that your credit score will fall due to the adverse credit you have.

Typically you will lose the below points based on the type of adverse credit you have

Default – 350

County court judgement-


Missed payment-

Adverse credit markers such as the above will stay on your credit file 6 years unless you are able to remove them by contacting the relevant court, credit provider or credit bureau. There are strict guidelines on when and how a negative credit marker which has been put on your credit profile can be removed so you should not ignore any warning letters from lenders or ignore your debts as they can come back to hunt you in the long run.

As the adverse credit markers on your credit profile get older, they will begin to have less relevance (provided the rest of your credit file is okay) although they may still hold your score down. 

Credit providers who perform a manual underwriting when considering a credit application from you may be more likely to offer your credit. Once the six years have passed you should begin to see your credit score rise again, provided you haven’t received more negative markers on your credit profile.

Adverse credit

Why you need good credit?

Aside from preventing you from being able to get credit products such as mortgages, loans, credit cards, homeowner loans etc at a desirable rate or get these credit products at all, adverse credit can also prevent you from renting as most landlords will check your credit report to see your credit score and history. This will give them insight into whether you usually repay your credit obligations and if they can rely on you to pay your rent on time every time.

Some landlords now report your rent to the credit bureaus. This is known as “rent reporting”. 

This can help boost your credit score as it shows you have good repayment behaviour. On the other hand, if you miss your rent repayments then this could lead to more adverse credit and ruin your credit history.

Your landlord will inform you and seek your consent before reporting your rental payment performance data to the credit bureau. Unlike other credit providers who have an obligation to report your credit repayment behaviour, you can opt-out of having your rental payment performance data from being reported if you feel it will do more damage than good.

Adverse credit

Check your credit score

If you think you have adverse credit then you should check your credit file before making any credit applications to avoid being rejected for credit and compounding the issue further.

You can check your credit file to see your credit score and history by signing up with any of the four credit bureaus in the United Kingdom. The four include Crediva, Equifax, Transunion and Experian.

Some of the credit bureaus will charge you to view your credit file, you don’t have to pay any of the credit bureaus to get your credit file you can simply request your statutory credit report (which is a free credit file that each of the four credit bureaus must provide to you once a year, upon request). Your statutory credit report will display any adverse-credit which is on your credit file and you can then investigate the matter further.

Errors on your credit file

It is advisable to sign up to all of the four credit bureaus and get your credit report from all of them as in some cases, they will hold varying data on you.  If the data any of the credit bureaus hold on you is an error then you should contact them and ask for it to be changed. 

The credit bureau will place a notice of correction on your credit file (this lets any lenders or entities which coma across you during the time the data entry is being investigated know that the specific information on your credit file is being challenged and could be incorrect) and then contact the entity which supplied the data to validate their entry on your credit file.  

The credit bureau will have 28 days to come to a resolution and will write to you within this time.

You won’t have to get your credit report from the credit bureau, you can get it from other companies such as CreditKharma UK, Clearscore or Checkmyfile. Clearsocreand Credit Kharma UK are free but checkmyfile does charge a fee although there is a free trial period and Checkmyfile does display all credit reports from the four credit bureuas.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.

How do I know if I have adverse credit?

To know if you have adverse credit you should simply get your credit report from all the four credit bureaus which include Crediva, Transunion, Equifax and Experian. You don’t have to pay for this report. You can get a free statutory credit report to check for adverse credit.

What is considered an adverse credit history?

Adverse credit history could be when any of the negative markers below are in your credit history:u003cbru003eu003cbru003eBankruptcyu003cbru003eMissed credit repaymentsu003cbru003eLate credit repaymentsu003cbru003eDefaultsu003cbru003eHome repossessionsu003cbru003eIndividual voluntary arrangementsu003cbru003eMortgage defaultsu003cbru003eCounty court judgementsu003cbru003eu003cbru003e

What is an adverse account?

An adverse account could be accounts which may hurt your credit score and history. This could be accounts such as payday loans. An adverse account could also be an account that is in arrears or is now in default and is being sent to a debt collection agency. This could be the case if you fail to make any repayments on your credit obligations.

What is an adverse credit check?

An adverse credit check is when a check on your credit file is to determine if you have adverse credit. This could be missed credit repayments, late credit repayments, bankruptcy or a home repossession. Lenders will usually conduct an adverse credit check before providing you with credit. This includes mortgage lenders, car finance lenders, personal loan lenders etc.u003cbru003eu003cbru003e

How long is adverse credit?

Adverse credit will usually stay on your credit profile for 6 years. There are some cases where you can remove it.

How do I fix my adverse credit?

You can fix your adverse credit by doing the below:u003cbru003eu003cbru003eGet your credit report from all bureausu003cbru003eMake a note of all adverse creditu003cbru003eDispute any adverse credit which you can dispute with the companies and credit bureausu003cbru003eCome to agreements with credit providers in other to remove the negative markersu003cbru003eGet on the electoral rollu003cbru003eGet a credit builder loanu003cbru003eGet a secured credit cardu003cbru003eGet a credit builder credit cardu003cbru003eKeep a credit utilization of less than 30%u003cbru003eIncrease your credit limitu003cbru003eKeep credit accounts open for as long as possibleu003cbru003eAvoid any missed paymentsu003cbru003ePay off your debts( outstanding balances) which are displayed on your credit fileu003cbru003eOpen a credit accountu003cbru003eu003cbru003e

What does no adverse credit history mean?

No adverse credit means that your credit history does not contain any negative markers such as missed credit repayments, late credit repayments, bankruptcy or a home repossession which may indicate that you may not pay for your credit obligations in time in the future.

Is a CCJ adverse credit?

Yes, a CCJ( country court judgement) is adverse credit which will stay on your credit file for 6 years and reduce your credit score by at least 200 points. You can remove a CCJ from your credit file if you pay it off within 14 days of receiving the claim letter. You can mark it as satisfied on your credit file if you pay it off after this time.

How can I get adverse credit removed?

Adverse credit will be removed from your credit file after 6 years. If it is inaccurate then you can get it disputed by with the credit bureaus and then removed.

How will it affect my credit report?

It will cause your credit score to fall and stay low until the adverse credit is removed after 6 years or before 6 years by you.

Getting a mortgage with adverse credit

You may want to consider using an independent mortgage broker to get a mortgage if you have adverse credit.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed Adverse credit and the potential of adverse credit to affect your ability to get credit products at fair rates.