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Adverse credit rating, what that actually means to you

What does adverse credit rating mean?

As consumers we have a credit history, an adverse credit history or adverse credit rating is due to the result of numerous negative items.
These items can be either missed payments, debt settlements, bankruptcies or CCJ’s to name a few.
Anytime you fail to make a payment on time it is recorded and goes on to your credit history, when you wish to get finance for anything, the finance company you are applying to will automatically check your credit history.
If you have a high recording of negative items this will give you a low credit score / adverse credit rating.

What can be the cause of an adverse credit rating?

A high percentage of people in the Uk have an adverse credit rating due to varying reasons, and each adverse item reported will have varying impacts.
For example if you are made bacnkrupt it could lower your credit score by 240 points, and this could stay on your credit history for 10 years.
Where as if you miss a repayment on an item you may only lose 50 points, however if you are a frequent late payer then this could be more of an impact.

Bankruptcy can lead to an adverse credit rating

Why does an adverse credit score matter?

When you need to borrow money and you approach a finance company one of the first things they will do is a credit search.
They will be looking at your credit score, if this is low, an adverse credit score then they will consider you a risk.
If you have had problems in making payments previously they will think that this will still apply to you.

(Please note that Ultracar car leasing only lease cars to people who have an adverse credit rating, as we believe that a credit score is not a true reflection of somebodies current financial situation)

Adverse credit rating due to an IVA

Useful notes on adverse credit ratings It is always wise to check your credit rating before you approach a finance company, because every time a company does a credit search on you, this further reduces your score.
It is best to be honest with the company you are applying too, tell them before you apply that you have had an IVA or you have been bankrupt so they can then advise whether they would be able to help you. There is no point in having unnecessary searches carried out.

  • An IVA will stay on your credit file for 6 years
  • A bank default will stay on your credit file for 5 years
  • You can only have a bank default removed from your credit file if it is there in error.
  • A bankruptcy stays on your credit file for 10 years