You may have heard the term adverse credit thrown around a bit online.
It’s simply another way of saying ‘bad’ or ‘poor’, and means that your credit history could be standing in the way of you being accepted for credit.
If you’ve got an adverse credit history, you may not even know about it yet. But there’s an easy way to change that.
Check your credit history
First of all, you should check your credit history online. You can do this for free using services ClearScore and Noddle.
Once you’ve signed up, you’ll have unlimited access to your credit history.
Being able to check your credit history means you can pinpoint where you’re doing well, and where there might be areas you can improve.
If you’ve borrowed before – whether with a credit card, loan or mortgage – and missed payments, defaulted or been given a CCJ, your credit history will likely be damaged. Defaulting on other things like your mobile phone contract and utility bills could also affect your credit history.
All of these agreements will be on your online credit history, so you can check to see whether it’s in good shape. Both ClearScore and Noddle will tell you if and where you’ve gone wrong, and they’ll offer tips on how you can improve it.
If you do find quite a few negatives, you may have a poor or adverse credit history. This means you’re unlikely to be able to get credit at the best rates, and you may have to pay more to borrow than if you had a good credit history.
There’s no such thing as a…
We’ve mentioned it many times before, but it’s something well worth keeping in mind when you’re looking at your credit history.
If you’ve ever wondered why your credit score on one site is completely different to another, it’s because there is no universal credit score.
The score you’re given by each reference agency is different as the way it’s measured varies between each website.
So in turn, this means you shouldn’t really pay much attention to the credit score you’re given by each agency. When you apply for credit, the lender will look at your credit history using one of the three credit reference agencies. However, what they see is very different to what you see when you log in.
Instead of seeing your credit score, they will see your credit history – how well you’ve managed credit in the past, your current and previous addresses, people you’re financially linked to, how much money you owe already, etc.
They then use their own scale to measure whether you are suitable for the borrowing you applied for. This means the credit score you’re given when you log into Experian, Equifax or Callcredit plays absolutely no part in their decision – they use their own instead.
Use it as a guide instead
Rather than using the score given to you as the be-all-and-end-all, it’s better to use it as a guide instead.
Generally, if the score a credit reference agency provides is going up over time, you can rest easy knowing that you’re on the right track. But if you notice it’s gone down one month, this can alert you to problems that may have cropped up that you were unaware of.
So in a sense, your credit score can be useful, but it’s not something you should be looking at when trying to find out whether you’ve got a good or an adverse credit history. You’re better off looking at the positive and negative things about your credit history and how you can improve on them.
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