If you have never missed a loan or credit card payment, you don't have to worry about the term "adverse credit." In this article, we'll talk about the ins and outs of the term "adverse credit," which refers to people who have not paid back their loans in a big way. The same thing can also be said with the words "sub-prime" and "poor credit." We're here to find out: what do you need to do...
If you have never missed a loan or credit card payment, you don't have to worry about the term "adverse credit." In this article, we'll talk about the ins and outs of the term "adverse credit," which refers to people who have not paid back their loans in a big way. The same thing can also be said with the words "sub-prime" and "poor credit." What we want to find out is what you have to do to be considered a bad credit customer and where the lender gets information about you.
First, we'll talk about the credit reference agencies. These are companies like Experian and Equifax that keep track of all of your financial transactions and sell that information to lenders. Insurance companies, banks, landlords, government agencies, and employers are also allowed by law to look at your credit history.
You might be surprised by how much they know about you. Aside from your name, date of birth, and social security number, they also have your past and present addresses, records of all the jobs you've had and where, your name on the voter's roll, your mortgage, credit card, loan, and hire purchase information, records of any unpaid County Court judgements, and, most surprisingly, information on all the loan and credit card applications you've ever made.
So where do the credit agencies get their information? They get it from offices that keep public records and from banks, credit card companies, and other financial institutions. Once you have a bank account, you're in the computer records, and credit agencies start gathering information about you.
Experian, Equifax, and the other agencies also do something else for lenders: they can give you a credit score based on the lender's own criteria for creditworthiness. Your credit score is very important because if it isn't high enough, you might not get the credit you want. Your credit score is based on how your financial information matches up with different criteria. You could get a good score if you have always paid your credit card bills on time, but a bad score if you have moved a lot or changed jobs a lot. In any case, the more likely you are to get the credit you want, the higher your score.
The final credit score gives you an idea of how likely you are to be able to get the credit, assuming that your payment habits will stay the same in the future. As an extra safety measure, they also compare your information to that of other applicants who are similar to you. They do this to see how well those people did. In the end, the decision about whether or not to give you credit is made automatically and based on statistics. If your score is close to the pass level, the lender may decide to give you less credit or a higher rate of interest.
All of the lenders have different ideas about what is acceptable and what isn't, and some will turn down your application without telling you why. It's their choice, and the credit reference agencies have nothing to do with it. All they do is gather the information in the first place. The lender is the one who calls you a "bad credit" customer.
Here is a list (in no particular order) of things that will make it hard for you to get credit with a lender: if you're behind on payments for a loan, credit card, or mortgage, if you've made a few late payments on the above, if you have outstanding and unpaid County Court or High Court Judgements, if you're not on the electoral roll at the address you gave on your application form, and if you've made more than a usual number of late If you recently went bankrupt or had your home taken away, you would usually be automatically turned down.
If you have any of the above problems in your recent credit history, don't be surprised if your application for credit is turned down, especially by the big, mainstream lenders. Some big lenders are a little more flexible when it comes to mortgages, especially if you already have a mortgage and are making payments on time.
This article should tell you most of what you need to know about "bad credit" and explain why lenders think you are a bad risk and what they mean by that. If the worst happens and you can't get credit because you have a bad credit history, you will probably have to go to a sub prime lender. If you meet their requirements, they will lend you money, but it will cost more.
The most important thing to remember is to always make your loan, credit card, and mortgage payments on time. Don't pay late, and even more importantly, don't fall behind. If you fall behind on your bills, the effects could be big and expensive.
