If someone has adverse data then this will generally mean that at some time in the last six years, they have failed to maintain a regulated credit agreement I.E. mortgage, loan, HP or credit card. Information relating to how you have conducted the repayment of any agreement is shared with the credit reference agencies such as Experian and Equifax and this information is then made available to any new credit provider you may approach in the future.
There are different levels of adverse data all of which will remain on your credit file for a six year period, the levels are late payments, this is where you should have made the agreed payment on the 28th of the month and did not pay it until the 10th of the following month, this could indicate to a lender that any future borrowing could be unaffordable.
Missed payments where you fail to maintain regular monthly payments this will show a lender that you are 1, 2 or maybe more down on your payments, if this continues then the lender will issue a default notice demanding that the debt is fully repaid within a certain time period, if this does not happen then the default will be registered on your credit file, the more recent the adverse data the more difficult it will be for the borrower to arrange finance.
If the debt remains unpaid for some time then the lender may take the borrower to court and if the court agrees a county court judgement will be registered against the debtor, if then not repaid the borrower would find it extremely difficult to get a lender to lend to them.
If in doubt get a copy of your credit report from Experian or Equifax and talk it through with one of our advisers.