This article discusses exactly what the term 'adverse credit history' means to people currently looking for credit.

Adverse Credit history - what does that mean to you?

If you have a perfect credit history

First of all, we will talk about the credit reference agencies, they are the people who get the information and pass it on to the lenders for a fee. The most commonly used credit reference agencies are Experian and Equifax. It's not just the lenders that can see your credit history either, anyone that has financial dealings with you or is to provide ( Car insurance ) you with a product or service, can see your file. For example, insurance companies, banks, landlords, government agencies and employers have the right, as long as they have a purpose as defined by English Law.

Are you sitting comfortably? This is what they know about you:

• your name, date of birth and National Insurance number;
• your current and previous addresses;
• whether you're on the electoral roll;
• details of all your employers;
• details of your monthly payments on credit cards, loans, hire purchase agreements;
• details of your mortgage;
• details of any unpaid County Court judgements
• records of all loan and credit card applications, irrespective of whether you were accepted by the lender.

The credit reference agencies collect their information from the Public Records offices and also from the financial institutions themselves, eg banks, building societies ( cheap life insurance ) and any other companies that could or have offered you credit. From the moment you get a bank account, you're on the public record, and your finances are there for people to access. If a financial institution or other party, as enabled by law, requests to see your credit history, then the credit reference agency will supply it.

Credit reference agencies also offer another useful function, they will give your data a credit score, using the lender's criteria to give your credit history a score which will ultimately decide whether or not you are eligible to receive credit. This is why your credit score is so important.

When a credit score is carried out on your credit history, your financial track record is given points for each criteria and how well it satisfies it. Obviously, the higher score you get, the better your scoring and the more attractive you become to the lender. For ( bad credit loans ) example, a history which shows you have always paid your debts back on time will give you a perfect credit score. These points are based on probability, in other words, the likelihood that you will repay the credit without defaulting. In effect, they are measuring your future ability to repay by your previous ability to repay, assuming that it will remain the same. They also compare your details to other applicants with the same characteristics as you, for example your age and demographic, to [ life insurance ] predict your future behaviour. It is basically an automatic decision, using statistics to match your details against criteria, and ensuring that the decision is based on facts and objectivity, and does not come down to a human decision (although this does happen in some cases).

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