What constitutes adverse credit?

jonnybeegood

HI,

I am posting on behalf of my friend who is planning to apply for a car lease. The lending criteria states 'no adverse credit' in the last 5 years. What does this actually mean? He has a few late payments where he has paid a few days late. These show as a '1' marker on his credit report. Does these slightly late payments count as adverse or does adverse refer to more serious payment issues??? I have advised him not to apply until he finds out.

National_Debtline

Hi Jonny


It's all in the eyes of the beholder, or in this case the potential lender. Any problem, however minor, can be perceived as "adverse" by a potential lender, depending on how much risk it believes it is taking. A bank being asked for a £200K mortgage is much more likely to take a late payment marker into account than, say, a mobile phone network assessing a request for a 24-month contract.


I'm afraid I can't offer a definitive answer as to whether your friend's application will be affected. The late payment info will be visible to the finance company - whether it is significant enough to bother them is another question entirely.


Before he takes the plunge with an application, he may want to look at adding a Notice of Correction to his credit report if he can offer mitigation for any late payment markers on his file. Lenders would then be able to take this extra information into account when making their decisions:


https://www.nationaldebtline.org/EW/factsheets/Pages/05%20EW%20Credit%20reference%20agencies%20and%20credit%20reports/Page-04.aspx


Dennis
@natdebtline