Everything You Need to Know About Adverse Credit
When applying for a loan, like a mortgage, or a credit card, your credit history will be investigated. This is to ensure you can be trusted to pay the money back. For those who have previously fallen behind on payments or have a bad credit history, your credit rating will be low. This is known as adverse credit.
You might be wondering how this will affect your chances of getting accepted for loans in the future, but we’re here to tell you that no matter your history, it is possible to find lenders out there willing to offer you a deal.
At Mortgages Online, we have access to a number of specialist lenders who can offer bad credit mortgages for those with a low credit score and adverse credit. And as an online mortgage broker, we can help you in the comfort of your own home.
To find out how we can help, do not hesitate to get in touch and a member of the team will be glad to help. Call us on 03300 58 60 58 or email at firstname.lastname@example.org.
This blog will go into detail about what adverse credit is and what it means for your financial future.
What Does Adverse Credit Mean?
Adverse credit refers to a person’s credit report that has a history of late payments, arrears, bankruptcy etc which negatively affects their credit score.
If you have adverse credit, it can make it a lot harder to get accepted for things like loans, mortgages and credit cards.
It will be tricky to convince high street lenders and banks to offer you a loan with adverse credit, but specialist lenders will be more than happy to offer you a deal.
What Can Cause Adverse Credit?
Now you understand what adverse credit is, what can cause it? There are a range of contributors that can give you an adverse credit history, which includes:
- Falling behind on payments and consistently making late payments. This can be for anything from your phone bill or your rent. Always make payments on time to avoid lowering your credit score.
- Declaring bankruptcy will negatively affect your credit, putting you into adverse credit.
- Foreclosures will also cause adverse credit. This is when a lender takes ownership of assets belonging to the person in debt to try and offset a debt.
- Charge-offs, this is when a debt company believes they will be unable to collect payments because they’re so far behind, is another big cause for adverse credit.
These are a few of the most common ways to fall into adverse credit. There can be other elements that will contribute, but it overall depends on your credit score and the severity of your debts. Some are seen as more serious as others, such as bankruptcy.
How Do I Find Out If I Have Adverse Credit?
Before you make the decision to take out a loan, you should always double check your credit score to ensure you don’t have an adverse credit profile. You can do this very easily on a range of online websites, and for free.
A couple of websites you can use to check your credit report:
How Does it Affect Your Credit Report?
Whenever you apply for loans, your credit report will be looked at. So if you have adverse credit, it is likely to affect your chances of being accepted.
All payment defaults and negative credit will also stay on your credit report for six years, so it can take years to get back to a healthy credit report. However, you can still work on your credit score make positive improvements to increase your chances of getting accepted in the future.
Apply For A Bad Credit Mortgage
For those with adverse credit, depending on how bad your history is, you may only be eligible for a bad credit mortgage.
This is simply a mortgage for those with a bad credit history, a low credit score or adverse credit. You aren’t likely to find this type of mortgage from high street lenders or banks, so you will need to take a look online for specialist lenders and an online mortgage broker who deals with adverse credit, like Mortgages Online.
For those who opt for a bad credit mortgage, there is a couple of things to be aware of:
- You could be expected to pay a larger deposit.
- You may have to pay higher interests rates on your mortgage.
- You could be required to have a high, stable income to be accepted.
How To Improve Your Adverse Credit
If you’re wanting to improve your credit as much as possible, there are ways in which you can boost your score to look more attractive to lenders. Address the problems with these tips:
- Make all payments on time, this can increase your score significantly.
- Pay off as much debt as you can.
- Spend money on a credit card, staying within your limits and paying it off as soon as you can.
- Avoid schemes such as Klarna that allow you to pay for items in months to come.
- Cut ties financially to those you are no longer associated with, such as joint accounts.
Get In Touch
If you have defaulted on payments in the past, have a history of debt and are worried about getting a mortgage, Mortgages Online offers the support you need.
We would be happy to speak with you to discuss your options, offer advice and help you find the ideal lender for your financial situation. We can help with anything from bad credit mortgages to how to improve your credit score.
Get in touch today to kickstart your financial journey by calling 03300 58 60 58.