20/11/2024

Having a County Court Judgment, or CCJ, against you can have a serious impact on your credit score, making it difficult for you to borrow money in the future.

A CCJ is a court order to pay back money that you owe. If payment is not made, court proceedings may be issued and if you don’t respond to the claim form issued by the courts, default judgment will take place. Default judgment enables a creditor (the person who you owe money to) to take enforcement action to get their money back. Enforcement action may include instructing bailiffs, obtaining charging orders over your home, attachment of earnings orders, transfer up to the High Court for a writ of control, and possibly service of a statutory demand for bankruptcy – all of which further decreases your credit score.

 

How does credit scoring work?

Credit scoring is a system used by creditors to decide how much of a risk it is to lend to you. When you apply for credit, you complete an application form which tells the lender lots of things about you. Each fact about you is given points. All the points are added together to give a score. The higher your score, the more credit worthy you are. Creditors set a threshold level for credit scoring. If your score is below the threshold, they may decide not to lend to you or to charge you more if they do agree to lend.

Having a CCJ will reduce your credit score, but enforcement action due to failure to pay your CCJ will have an even greater impact resulting in significant points deductions.

All County Court Judgments are entered in a public register – the Register of Judgments, Orders and Fines. This is passed to credit reference agencies, who supply the information to credit grantors and others seeking information on your financial standing.

A poor credit score will make it difficult for you to get credit, whether that’s to get a mortgage, car loan or credit card.

 

How can I improve my credit score?

Because of the way credit scoring works, the single best thing you can do if you receive any court proceedings, is to deal with them immediately to avoid any judgments being entered against you.

If you pay the sum that you owe in full within one month from the date of the judgment, you can ask the court to cancel the entry on the county court register. If you pay the sum due after the period of one month, your file will be marked as satisfied but the entry will stay on the register for a period of six years. Some information may be held for longer, for example, where a court has ordered that a bankruptcy restrictions order should last more than six years. If information is held for longer than it is supposed to be, you can ask for it to be removed.

Other practical steps you can take to improve your credit score include:

  • Make sure you are registered to vote at your home address.
  • Pay your bills on time.
  • Clear any outstanding balances.
  • Manage your current account and don’t exceed your agreed overdraft.

 

How can I check my credit score?

Different lenders use different systems for working out your credit score. They won’t tell you what your score is but if you ask them, they must tell you which credit reference agency they used to get the information about you. You can then check whether the information they used is right.

There are three credit reference agencies – Experian, Equifax and TransUnion. All the credit reference agencies keep information about you and a lender can consult one or more of them when making a decision.

The credit reference agencies keep the following information:

  • The electoral roll. This shows addresses you’ve been registered to vote at and the dates you were registered there.
  • Public records. This includes court judgments, bankruptcies and, in England, Wales and Northern Ireland, IVAs, Debt Relief Orders and Administration Orders. In Scotland it includes decrees, sequestration orders, DAS Debt Payment Programmes and Trust Deeds.
  • Account information. This shows how you have managed your existing accounts such as your bank account and other borrowing. It shows lenders whether you have made payments on time.
  • Home repossessions. This is information from members of the Council of Mortgage Lenders about homes that have been repossessed.
  • Financial associations. This shows details of people you are financially connected to. For example, it includes people you’ve applied jointly for credit with or who you have a joint account with.
  • Previous searches. This shows details of companies and organisations that have looked at information on your file in the last 12 months.
  • Linked addresses. This shows any addresses you have lived at.

 

For advice on any debt recovery matter, please contact Richard Anderson at Beswicks for further information. You can email richard.anderson@beswicks.com or call us on 01782 205000. or 0161 929 8494. Take a look at our services to find out more about how we can help you.