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Term: Adverse Credit History

5 Feb 2015

A track record of poor repayment history on one or more loans or credit cards. An adverse credit history will be reflected in a consumer’s credit report. It will lower his or her credit score and make it more difficult to get a loan or credit card with the best terms or even to be approved at all.

Items that contribute to an adverse credit history include past-due payments, delinquent payments, charge-offs, collections, debt settlements, bankruptcies, short sales, foreclosures, repossessions, wage garnishments and tax liens. Some of these adverse items have a more significant impact on your credit score than others. For example, a bankruptcy might lower your score by 240 points and will stay on your credit report for up to 10 years, while a payment that’s 60 days delinquent might lower your score by 50 points, a drop you could recover from fully after several months of positive credit history.

Lenders and creditors care about adverse credit history because if you have had credit problems in the past, you are more likely to have them in the future. As a result, they might not want to lend you money, or they might only be willing to lend you money at a higher interest rate than what they charge their lowest-risk customers who have no adverse credit history. You can find out whether you have an adverse credit history by getting your free credit report from each of the three major credit bureaus, Equifax, Experian and TransUnion, at

In the case of student loans, adverse credit history has a very specific meaning. It means that you have a 90-day delinquency on any debt or that you have experienced a specific adverse credit event within the last five years, such as a bankruptcy, repossession or tax lien. An adverse credit history will make you ineligible for a federal PLUS loan.

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