Adverse Credit When Is A Credit History Labelled As Being Adverse

Adverse Credit – When is​ a​ Credit History Labelled as​ Being Adverse?
If you​ are a​ borrower with a​ history of​ unsatisfactory credit transactions,​ the​ lenders will describe your credit history as​ adverse .​
The expressions poor credit,​ bad credit and sub-prime all describe exactly the​ same situation .​
This leads to​ a​ number of​ questions; what credit information is​ collected about you,​ where does it​ come from and how bad must your credit history be for it​ to​ be labelled as​ adverse?
It's the​ credit agencies like Equifax and Experian which collate information about you​ and then process it .​
They are then legally entitled to​ sell the​ information to​ anyone with an​ authorised purpose as​ defined by Law .​
This includes banks,​ building societies,​ credit card companies,​ other lenders,​ landlords,​ employers,​ any government agency and anyone you​ have ordered a​ product or​ service .​
And you'll be simply astounded what information the​ credit agencies hold about you!
A typical computer file will store your name,​ address,​ date of​ birth and social security number .​
It will also include your previous addresses,​ whether you​ are registered on​ the​ voters' roll,​ details of​ your current and previous employers .​
They also hold crucial information relating to​ your monthly payments on​ your mortgage,​ hire purchase agreements,​ loans and any credit cards you​ have .​
Then their computers will store information from the​ public records .​
If you​ have any Court judgements in​ respect of​ your debts,​ then the​ details will all be on​ their files .​
The file is​ topped off with details of​ all the​ times you​ apply for credit .​
All this data is​ gathered from two chief sources: the​ Public Records offices and records supplied by financial institutions from throughout the​ UK .​
You can't escape their watchful eye .​
Quite honestly,​ the​ agencies are recording your credit history from the​ first day you​ show on​ their computer screens .​
The credit agencies then sell this information to​ anyone to​ whom you've applied for credit .​
As part of​ their service,​ they'll also credit score your data .​
This enables your lender to​ make a​ statistical based decision whether to​ award you​ credit .​
So within this credit vetting process,​ your credit score becomes crucial .​
Under credit scoring your credit history is​ statistically judged and awarded a​ number of​ scoring points .​
The more points you​ have,​ the​ better your credit rating .​
These points measure the​ probability that you​ will repay any credit provided to​ you​ .​
The system is​ based on​ the​ principle that it's possible to​ predict your future credit performance by examining your credit history and statistically comparing it​ with the​ performance of​ other applicants who have similar characteristics .​
The points score allocated to​ you​ then makes it​ possible for your prospective lender to​ calculate the​ level of​ risk in​ your application and lessen the​ element of​ subjectivity in​ their lending decision .​
So now we revert to​ our first question - When is​ a​ credit history labelled as​ being adverse?
In practice it's not the​ credit agencies but the​ lender that decides .​
Each lender has it's own lending policy through which they define the​ level of​ credit risk which is​ acceptable to​ them .​
If your credit score reaches a​ certain level,​ then you​ 'pass' their credit screening .​
If you​ don't score sufficient points,​ the​ lender may either refuse your application or​ offer you​ a​ smaller sum than you​ had applied for or​ offer you​ a​ higher interest rate .​
The decision is​ always theirs - after all it​ is​ their money! But as​ lenders each have different lending policies,​ your credit score could be acceptable to​ one but not to​ another .​
However,​ we can tell you​ some of​ the​ main black marks that will harm your credit score - the​ last two being by far the​ worst:
You're not on​ the​ Voters Roll where you​ claim to​ be living .​
Multiple applications for credit
Payments that are over 30 days late on​ your mortgage or​ other loans
Arrears on​ your mortgage or​ other loans
County or​ High Court Judgements for debt
Recent Bankruptcy (undischarged bankrupts will always be refused credit)
Lending policies are central to​ a​ lenders business and as​ such are highly confidential but on​ mortgages especially,​ some will indicate that certain black marks might be acceptable .​
All things considered,​ by reading this article,​ you​ should know if​ there is​ a​ likelihood that you​ will be judged as​ an​ adverse credit risk,​ But in​ the​ end you​ cannot be absolutely sure unless you've been refused by a​ main line lender .​
If you​ do get turned down you'll have to​ apply to​ a​ sub-prime lender who is​ more likely to​ accept you,​ especially if​ you​ own your own home - but you'll definitely be charged a​ higher rate of​ interest for the​ privilege .​
All in​ all,​ it's essential to​ build up a​ good credit profile that will reflect in​ your credit score .​
This then gives you​ access to​ a​ wide range of​ credit facilities at​ reasonable interest rates .​
So please remember,​ if​ you​ need a​ loan,​ make sure you​ can afford it​ before you​ sign up and then maintain a​ perfect payment record.
Adverse Credit When Is A Credit History Labelled As Being Adverse Adverse Credit When Is A Credit History Labelled As Being Adverse Reviewed by Henda Yesti on December 25, 2017 Rating: 5

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