What is a CCJ?

A County Court Judgement, also known as a CCJ is an order issued by the County Court for someone who owes money to pay back money to the company or person they borrowed it from. A creditor (the person or company loaning the money) will apply for a CCJ to get this money back if they haven’t been able to collect the funds through other means. CCJs are used throughout the UK in cases where borrowers of short-term loans such as have been unable to repay the loan and have not been placed on a debt management or repayment plan.

It is important to understand what a CCJ is, what it will mean for you in practice, and how it can affect your credit rating. By not addressing a CCJ and the underlying issues causing it to have happened in the first place, you may be placing yourself in an unnecessarily difficult position.

It is always best to speak to your lender as soon as you realise you are having trouble repaying your loan. This allows you and the lender to agree on a mutually beneficial and affordable repayment plan so that you can clear your debts as soon as possible.

What happens if I receive a CCJ?

There are several potential ways of dealing with a CCJ:

• You can choose to pay the creditor in full straight away. This will mean that the CCJ will not end up appearing on your credit file (which could otherwise impact your ability to get access to finance in the future)

• You could request to pay the amount back in instalments, based upon a mutual agreement with the creditor who issued the CCJ, for example as part of a debt management plan

• You can dispute the amount owed or the entire claim altogether, with the County Court making the final decision

It is important to call your loan or credit provider if you are struggling to repay.

How long does a CCJ last?

Once a CCJ is issued, a debtor will have one month to repay the debt in full before the CCJ appears on the register and is recorded by credit reference agencies to appear on a debtor’s credit file.

Once a CCJ is recorded in a person’s credit file, it will remain on file for six years. This could end up making it difficult to get approved for credit in the future, as lenders may doubt your ‘creditworthiness,’ having defaulted or been late to repay debts owed. Moreover, most direct lenders, i.e. the actual lender of the loan (not the broker you may apply through), will check the CCJ Register as part of their routine credit checks before funding a loan.

What happens if I ignore a CCJ?

If you ever receive a CCJ from any lender, for any type of loan or finance, you should act as quickly as possible to either dispute the claim, should you have a legitimate reason to do so or repay the debt as soon and as fully as possible.

Usually, a CCJ will be removed from your credit file after 6 years, even if it remains unpaid. However, you should never ignore a CCJ, as creditors can initiate legal debt recovery actions against you if it remains unpaid.

The long-term effect of having a CCJ on your credit file is extremely damaging and is a hindering factor when it comes to requiring and applying for future credit, even when it comes to things like getting a mobile phone or credit card. So, you should work towards repaying your debts as soon as possible.

How to remove a CCJ from your credit file

Providing that you repay the full amount within a month, the CCJ will not appear on your credit file, although after this period, it will be registered. There will however be a note indicating that you paid the amount back before a CCJ occurs. This is known as a ‘satisfied CCJ.’

Under certain circumstances, you may also be able to remove a CCJ from the register if you appeal to the court. However, this is a risky strategy as they do not necessarily get removed upon appeal and there is no guarantee your request will be granted at all by the courts.

Can I repair my credit file after receiving a CCJ?

CCJs are something that lenders look out for instinctively when assessing an applicant’s credit file and credit history. One or more CCJs are therefore very damaging if you have any on your file. However, whilst it is not necessarily possible to ‘reverse’ a CCJ once it is on your file, there are several practices you can undertake to try and repair your credit rating, making you that little bit more appealing to future lenders:

Register on the electoral register

If you are not already on the electoral register, registering yourself at your permanent UK address is a positive step as it confirms your place of abode to any future lenders

Check your details

Obtain a copy of your credit report (this can be done for free with the likes of CallCredit and Experian) and check that your details are correct

Consider credit repair

There are specific products and loans available in the UK such as credit repair and bad credit loans that are specifically designed for those with poor credit histories. However, use these carefully as missing repayments could further harm your credit record

Minimise applications

For many products and loans, each time you make an application there is a record of prospective lenders’ subsequent checks each time they carry one out. Many closely recorded checks can indicate many rejections and this is looked down upon by many lenders and credit providers. Hence, by minimising the applications you make, you can minimise the number of checks by lenders.