What Does Adverse Credit Mean? Quick Answer

In this article, we’ll help you understand what adverse credit means. Adverse credit is a term that comes up when someone has missed repayments on credit cards or loans more than once. We know that this might make you worried about your future finances, but don’t fret; you’re not alone. Each month, over 170,000 people come to our site to get advice about money problems.

We’ll be explaining some key things. such as:

• What does ‘adverse credit’ mean?
• How long does adverse credit last?
• How can you know if you have adverse credit?
• How can you fix it?
• How can it be removed from your credit report?

Our team understands your worries because some of us have had money troubles too. We know how it feels when things don’t go to plan. But together, we can find a way forward.

Let’s dive in and start sorting out these issues.

A poor track record

Adverse credit history is another way of describing adverse credit, i.e. it is someone who has not met their credit repayment terms by not repaying lenders on time or the right amount for a prolonged duration. 

They may have missed multiple repayments on the same loan, or defaulted on a number of credit agreements simultaneously. The two terms are often used interchangeably.

How do I know if I have it?

You might have had loan arrears in the past and are now wondering how to check if you have an adverse credit history.

You can find out if you have adverse credit by completing a credit check on a credit reporting agency website. 

As lenders report defaults and negative balances to a credit agency, you’ll need to complete a credit check to find out. 

If you know you failed to pay what you borrowed in full or on time, it’s likely you will have bad credit. 

When the company reports your missed payments, your credit score will decrease by a considerable amount of points depending on the nature of the missed payment.

If you repeatedly miss payments, your credit score decreases more, and you will be left with an unsatisfactory credit rating. 

Some reporting will cause a bigger decrease in your credit score, such as bankruptcy. 

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Where can I find my credit report?

There are multiple online credit reference agencies registered in England, Wales and Scotland that you can use to access your credit report.

Some examples include Equifax, TransUnion, Experian and CallCredit. You may prefer to use another online agency. 

These agencies typically offer free trials where users can see their credit score and credit history for free for 30 days.

However, you must remember to cancel your free trial, or you could be made to pay for the following month(s). 

How do I fix it?

The first way to possibly improve your credit score and any adverse credit history is to look for lender errors on your credit report.

Sometimes, a credit report will include erroneous details that lower your credit data. But you can ask lenders and agencies for these errors to be removed. 

You are usually asked to contact the lender first and ask them to request the error be removed. If they dispute the data held, you can ask the agency to look into the matter. 

Another way to “fix” adverse credit is to improve your current and ongoing financial health. By being responsible with money and repaying lenders as agreed, your score can increase, and the risk of lending credit to you will eventually decrease. 

Five common ways to do this are:

1. Pay your bills on time and in full
2. Avoid credit you don’t need
3. Prioritise paying off debt (maybe those with high-interest rates first)
4. Don’t move home too frequently
5. Use limited credit responsibly

Some of these tasks are easier said than done. You might need the assistance of a budget planning tool, or even debt solutions.

A money management professional can help with the latter, but some equivalent services are available with debt charities like StepChange or National Debtline.

How do I remove it from my report?

You can remove adverse credit from your credit report by looking for errors and asking for them to be removed by your lender from your credit history.

The only other way that adverse credit can be removed from your credit report is when they are automatically deleted after six years. 

But it’s just as important not to accumulate more arrears.

How long does it last?

Adverse credit history will remain on the individual’s credit file for six years in the UK.

After six years have elapsed since the late payments, the financial data is deleted from the credit score. 

However, there are ways to improve your credit file in the meantime, which could enable you to access credit from loans and credit card companies even with previous adverse credit. 

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How to avoid it

A bad credit score begins with failing to keep up with credit agreements. This may be due to personal circumstances changing quickly, such as unemployment. Or it could be due to poor money management. 

In many cases, it’s not your fault at all; you may have been wrongfully given credit in the past or paid an illegal rate of interest (too high!). 

You can avoid late payments by asking lenders for breathing space or payment holidays when circumstances change.

They may be willing to renegotiate agreements to help you avoid negative account balances and thus, negative reporting.