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Adverse Credit Loans
Adverse Credit LoansAbout Adverse Credit Loans

Credit sticks with us throughout our whole life, and it does not take a lot to turn that perfect credit rating into a low rating. Your credit history is recorded as you use your banking facilities, various lending institutions will record your credit as and when you make use of various services i.e. car finance, contract mobile phone etc.

• So what is adverse credit history ?
• Why could it effect me
• How would it effect me ?


Well an adverse credit history is a bad label to carry, adverse (bad) credit will effect your ability to apply for any type of loan or credit agreement, lenders will refuse your application or charge you a higher interest rate if your reputation for repayment is poor. Credit history can effect applications for mortgages, loans and financing which are now becoming a part of everyday life.

Everybody has a credit file, maintained by a credit reference agency. Many people have adverse credit details on their files, such as ccj's and/or defaults This means that when these people apply for general credit, e.g for a mortgage, loan or credit card, they may be declined.

Most people are not aware of credit information, credit files and credit reference agencies, yet they play an ever increasing importance in today's world. Most lenders will automatically run a credit search on applicants, by contacting the best known credit reference agencies, Experian ltd or Equilfax. These reference agencies' purpose is to keep files containing credit information, including information about you and previous credit history.

Why not take a look at www.myequifax.co.uk.

Arrears

A borrower is described as being 'in arrears' when they have fallen behind in their repayment schedule. The amount of arrears is typically measured in months or pounds (e.g.) 6 months arrears means the borrower is six months behind with their repayments. This does not automatically mean that the borrower has their term extended in order that they can repay their debt, as often a lump sum payment is required to clear the debt accrued.

Bankrupt

A corporation, firm or individual is described as being 'bankrupt' when they are relieved from paying all debts once their assets have been surrendered to an appointed third party. Bankruptcy proceedings are managed via the court system, with the appointed third party designated by the court in charge of the proceedings.

County Court Judgements (CCJ)

This is an adverse ruling by a County Court against an individual who has not satisfied their credit agreements and who has not made the necessary debt repayments to their creditors. Once the ruling has taken place it will be recorded against the person's credit history and will appear on every credit search for the next seven years. This may affect the quality and the quantity of the credit facilities available to the individual, as they are likely to be classed as a higher risk proposition.

Defaults

If an individual fails to make payments on a credit agreement, or fails to comply with their creditors requirements, they will be described as having 'defaulted'. Defaults can, over time, lead to County Court Judgements if the individual fails to satisfy the terms laid down by their creditor. Defaults are recorded on a person's credit file to enable lenders to assess whether they are a viable lending proposition.

No Credit History / Near Prime

Individuals who have no previous or existing credit agreements in place may find it difficult to obtain credit. This is because they have no credit history and lenders are unable to assess whether they are reliable payers or a good risk. Self-employed individuals may also find it difficult to obtain credit, as there is a higher risk of non-payment due to annual earnings being non-guaranteed. Some lenders do offer products designed to 'build your credit rating', and although their terms may not be as attractive as those of the products offered to prime applicants, they do offer individuals the chance of building a credit history.
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