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Adverse credit is any negative information on your credit file that shows you have had trouble keeping up with borrowing. It covers late or missed payments, defaults, county court judgments (CCJs), mortgage arrears, debt management plans, IVAs and bankruptcy. People often use “bad credit” and “impaired credit” to mean the same thing.
When you apply to remortgage, lenders check your credit report and look at the type of adverse credit, how much there is, how recent it is and whether it has been settled. Most negative entries stay on your file for 6 years. Older, smaller and settled issues tend to matter less than recent or ongoing ones, although every lender sets its own criteria.
What counts as adverse credit?
Lenders see the reports held by the credit reference agencies: Experian, Equifax and TransUnion. The main types of adverse entry are:
- Late or missed payments. A marker is recorded when a payment on a loan, card, mortgage or household bill is late. See remortgaging with missed payments.
- Defaults. A default is normally recorded after about 3 to 6 months of missed payments, when the lender treats the agreement as broken. See remortgaging with defaults.
- County court judgments (CCJs). A court order to repay a debt. In Scotland the equivalent is a decree. See remortgaging with a CCJ.
- Mortgage arrears. Missed payments on a mortgage or secured loan, which lenders tend to view seriously. See remortgaging with mortgage arrears.
- Debt management plans (DMPs). An informal plan to repay creditors. The plan itself is not a public record, but creditors may record arrangement-to-pay markers, missed payments or defaults. See remortgaging with a debt management plan.
- IVAs, trust deeds and bankruptcy. Formal insolvency. In Scotland the nearest equivalent to an IVA is a protected trust deed, and bankruptcy is called sequestration. See remortgaging after an IVA.
Some things are not adverse credit but can still affect an application. These include not being on the electoral register, having little credit history, making several hard-searched applications in a short time and using a large share of your credit card limits.
How lenders judge severity and recency
There is no single industry scale. Each lender uses its own scoring and its own criteria, so the same credit file can get different answers from different lenders. In general, though, lenders tend to ask similar questions.
| Question a lender may ask | Why it matters |
|---|---|
| What type of issue is it? | Many lenders view mortgage arrears, bankruptcy and IVAs more seriously than a late phone bill. |
| How recent is it? | A problem from 5 years ago usually carries less weight than one from last year. |
| How much was it for? | A small default on a utility bill may be treated differently from a large unpaid loan. |
| How many are there? | One isolated issue is often viewed differently from a pattern of several. |
| Has it been settled? | Satisfied CCJs and settled defaults may be viewed more favourably than unpaid ones. |
| What has happened since? | A clean record since the problem shows how you manage credit now. |
This table is a general guide to how lenders often think, not a set of fixed rules.
Recency tends to matter most. Lenders commonly look at set periods, such as the last 12, 24 or 36 months, and some ask whether you have had any adverse credit in the past 6 years. The further in the past an issue is, the less weight it usually carries.
Light adverse, heavy adverse and impaired credit
You may hear brokers and lenders talk about “light adverse” and “heavy adverse” credit. These are informal industry terms, not legal categories, and different firms use them in different ways.
- Light adverse is commonly used for a small number of older or low-value issues, such as a couple of late payments or a small satisfied default.
- Heavy adverse or impaired credit is commonly used for more serious or more recent problems, such as several defaults, recent CCJs, mortgage arrears, or an IVA or bankruptcy.
Where a file sits on that spectrum can affect which lenders might consider it, how much they may lend compared with the value of your home and the rates offered. Rates for adverse credit are often higher than high-street rates. Your equity plays a part too, and our guide on how LTV affects a bad credit remortgage explains why.
The 6-year rule
Most negative information stays on a UK credit file for 6 years and then drops off automatically. The start point depends on the type of entry.
| Entry | The 6 years runs from | Does paying it shorten the 6 years? |
|---|---|---|
| Late or missed payment | When the marker was recorded | No |
| Default | The default date | No, it is marked satisfied or settled |
| CCJ (England and Wales) | The judgment date | Only if paid in full within one calendar month of the judgment |
| IVA | The start date | No, even if it ends early |
| Bankruptcy | The bankruptcy date | No |
These rules apply across all three agencies. Lenders can still ask about your history on the application form, and some forms ask whether you have ever had a CCJ or been bankrupt, so always answer honestly. For CCJs in detail, see how long a CCJ affects a mortgage.
How to check your credit file
Checking your own file before you apply shows you what a lender is likely to see and gives you time to fix mistakes.
- Get your statutory report from all three agencies. It is free from Experian, Equifax and TransUnion. Lenders may use one, two or all three, and the information is not always identical.
- Check the details. Look for accounts you do not recognise, wrong addresses and debts shown as unpaid that you have settled. You can ask the agency to correct inaccurate information, or add a short notice of correction to explain an entry.
- Note the key dates. Write down the date of each default, CCJ or missed payment so you know when each will drop off.
- Check the electoral register. Being registered at your address helps lenders verify your identity.
- Focus on the entries, not the score. Lenders do not see the score shown in a credit app. Each agency calculates its own score on its own scale, and lenders use their own scoring. See remortgaging with a low credit score.
Checking your own file is a soft search, so lenders cannot see it. Applying for credit usually involves a hard search, which other lenders can see, so it can help to avoid several applications in a short space of time.
What adverse credit means for a remortgage
Adverse credit does not automatically rule out a remortgage, but it can narrow the choice of lenders and affect the terms offered. Some lenders specialise in adverse credit and look at the circumstances behind the entries, not just the entries themselves.
Remortgaging with a new lender is not the only route. If you are not borrowing more, a product transfer with your current lender may be available without a full affordability assessment, although a lender can still decide what it offers someone in arrears. If you are struggling with debts, free and impartial help is available from MoneyHelper, StepChange and National Debtline. Our bad credit remortgage page explains the wider options.
Frequently asked questions
Is adverse credit the same as a bad credit score?
Not quite. Adverse credit means specific negative entries on your credit report, such as defaults or CCJs. The score shown in a credit app is an estimate worked out by that agency, and each agency uses a different scale. Lenders do not see that score. They look at your report and apply their own scoring and criteria, so the entries usually matter more than the number. See remortgaging with a low credit score.
Does paying off a default remove it from my credit file?
No. A default stays on your credit file for 6 years from the default date, whether or not you pay it. Paying it means it will be marked as satisfied or settled, which some lenders may view more favourably than an unpaid default. Read more about remortgaging with defaults.
Will checking my own credit file harm my chances?
No. Checking your own file is a soft search, which other lenders cannot see and which does not affect your credit. Hard searches, which happen when you apply for credit, are visible to other lenders. You can get your statutory credit report free from each of Experian, Equifax and TransUnion.
Can I remortgage with adverse credit?
It can be possible, depending on the type, amount and age of the adverse credit, your equity, your income and each lender's own criteria. Some lenders specialise in adverse credit, and rates are often higher than high-street rates. Nobody can promise an outcome, but understanding your file first helps. Our bad credit remortgage page explains the options, including staying with your current lender.