Adverse Credit History

Bad Credit History


Learn About Credit HistoryWhether you call it an adverse credit history, a bad credit history, a poor credit history, or a saltier term unfit for publication, a bad credit history report means that you face an uphill and costly climb to restoring your credit rating. No matter how adverse your credit history may be, with patience and careful money management, you can eventually repair and put a bad credit history report behind you. To repair your adverse credit history, there are credit cards for adverse credit and adverse credit loans available. These options involve small charges and high interest rates, but they'll be the foundation for turning your credit score around.

What's considered an adverse credit history?

An adverse credit history will contain lots of missed payments, debts sent to collection agencies, a bankruptcy, tax liens, repossessions, etc. But perhaps the best way to illustrate adverse credit is by showing what's generally considered a good, fair, or poor credit score. FICO® scores range from the mid-800s (best) to the low 300s (worst).

  • 720 and higher: Very Good to Excellent
  • 680 to 720: Good
  • 620 to 679: Okay
  • 580 to 619: Poor
  • 500 to 580: Bad
  • 499 and below: Very Bad

How an adverse credit history affects your loan options

Negative items on a bad credit history report will remain for at least seven years. They'll severely limit your loan options, as very few lenders will want to risk losing even a modest sum of money on someone with a poor credit history. Finding a loan will take extensive research. You'll likely have to jump through more hoops, and if a lender extends credit, it will probably come with a limit of $500 or less. You'll also have to pay a very high interest rate on the money you borrow. Basically, an adverse credit history shifts all the advantages to the lender.

What you can do to overcome adverse credit

Despite your poor credit history, you'll be able to find lines of credit from lenders who specialize in, and capitalize on, loaning money to people with bad credit. Here are some steps to overcome an adverse credit history.

  1. Get a copy of your credit report.

  2. Review your credit history, and repay outstanding debts as quickly as possible.

  3. Consider speaking with a credit counselor for an outsider's perspective on debt consolidation, but do not take out a debt consolidation loan.

  4. Cut up your credit cards, and close the accounts.

  5. Get a part-time job, in addition to your full-time job, and cut way back on unnecessary expenses.

  6. Pay your rent, mortgage, utilities, and other essentials on time every month, without fail.

  7. Once your debts have been paid off, apply for a secured credit card. Use that card responsibly, paying the balance off in full and on time each month.

It won't be easy; in fact, it can often take several years to recover from a bad credit history. In time, though, you should be able to overcome an adverse credit history and build a solid standing in the eyes of potential lenders.

 

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