Adverse Credit
Adverse credit history, also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history, and bad credit history, is a negative credit rating.
Adverse credit history can come under a number of different headings. It can also be known as a poor credit history, non-status credit history or impaired credit history. These terms are all used by credit companies when judging one's credit history. When you apply for a loan, lenders, banks and credit card companies will look at your credit history in order to judge your financial credit standing. They gain this information from credit agencies. Credit agencies track your history of repaying credit and loans. They have on file your financial transactions when repaying loans or credit. They are able to use this information to tell whether you have an adverse credit history or not. Credit agencies track your repayments on loans and other forms of credit. They keep this information on record and assign each person a credit score. If your credit score is below a certain amount, then you will be marked down as having an adverse credit history. This may mean that you are unlikely to repay your credit transaction on time or that you may miss payments altogether.
A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.
In the U.S., a consumer's credit history is compiled by consumer reporting agencies or credit bureaus. The data reported to these agencies are primarily provided to them by creditors and includes detailed records of the relationship a person has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information is reviewed by a lender to determine whether to approve a loan and on what terms.
As credit became more popular, it became more difficult for lenders to evaluate and approve credit card and loan applications in a timely and efficient manner. To address this issue, credit scoring was adopted.
Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes an applicants overall creditworthiness. Scores, frequently based on numbers (ranging from 300-850 for consumers in the United States), statistically analyze a credit history, in comparison to other debtors, and gauge the magnitude of financial risk. Since lending money to a person or company is a risk, credit scoring offers a standardized way for lenders to assess that risk rapidly and "without prejudice."All credit bureaus also offer credit scoring as a supplemental service.
Credit scores assess the likelihood that a borrower will repay a loan or other credit obligation. The higher the score, the better the credit history and the higher the probability that the loan will be repaid on time. When creditors report an excessive number of late payments, or trouble with collecting payments, the score suffers. Similarly, when adverse judgments and collection agency activity are reported, the score decreases even more. Repeated delinquencies or public record entries can lower the score and trigger what is called a negative credit rating or adverse credit history.
Your credit score is a number calculated from factors such as the amount of credit outstanding versus how much you owe, your past ability to pay all your bills on time, how long you've had credit, types of credit used and number of inquiries.The three major consumer reporting agencies, Equifax, Experian and TransUnion all sell credit scores to lenders. Fair Isaaac is one of the major developers of credit scores used by these consumer reporting agencies. The complete way in which your FICO score is calcualted is complex. One of the factors in your Fico score is credit checks on your credit history. When a lender requests a credit score, it can cause a small drop in the credit score.That is because, as stated above, a number of inquiries over a relatively short period of time can indicate the consumer is in a financially difficult situation.
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