Adverse Credit

A term referring to an individual’s less-than-perfect credit history.

A borrower with a history of unsatisfactory credit translations will typically be described as having adverse credit. Such expressions as ‘sub-prime’ and ‘poor credit’ may also be used, all basically referring to anything that could negatively affect the borrower’s credit rating or credit history.

What is the role of credit reference agencies?

Whenever a borrower takes out a credit product such as a loan, credit card or mortgage, this information is reported to the three credit reference agencies, Equifax, Experian and CallCredit. This makes up the borrower's credit history, which is then checked by a lender when the borrower next applies for credit from them.

Practical Application Example

“ A typical example of adverse credit is a missed payment on a loan that you have borrowed. When this occurs, the lender will let the credit bureau – also known as the credit reference agency – know of this, so that it can be added to the credit file the agency holds on you. Adverse credit can also be caused by late payments, defaults, IVAs and County Court Judgements (CCJs), among various other events. ”