Lenders perform soft credit checks for many reasons. In most cases, they don’t affect your credit score or your ability to get credit in the future.
However, if you have an existing court order, it’s natural to wonder whether a lender could not only become aware of it by performing a soft credit check but also reject your credit application because of it.
What is a CCJ?
A County Court Judgment (CCJ) is a type of court order that your creditor can apply for in England, Wales, or Northern Ireland if you’ve continually missed payments on a debt. If the court agrees there is a debt to pay, you’ll need to make payments as per the court’s instructions.
Before you receive a CCJ, you’ll be given multiple opportunities to repay the debt. This means that you’ll never be issued with a CCJ out of the blue and won’t be expected to repay the debt in full with no warning.
Unless you pay the debt in full within one month of receiving the CCJ, it will be added to your credit report and a public register called the Register of Judgments, Orders and Fines. This will be visible to lenders, making it extremely difficult to get approved for credit for a number of years.
What is a soft credit check?
When you apply for any type of credit, the lender will perform either a hard or a soft credit check or credit search. This is essentially when they access your credit report and look at the information contained on it to help them decide whether or not to give you credit.
Put simply, a soft credit check is a top-level view of your financial history. It’s mainly used for preliminary assessments and eligibility checks before you make an official application and a hard credit check is carried out.
Checking your own credit score will count as a soft search, meaning you can check your credit score as often as you want without it negatively affecting your credit score. Only you will be able to see soft credit searches and they’ll disappear after 12 months.
What is a hard credit check?
Compared to a soft credit check, a hard credit search is a detailed look at your financial history. It’s generally used by lenders after you apply to help them decide whether to approve or reject your application.
In most cases, you’ll be asked to authorise a hard credit check. This means that a hard credit check should never happen without your permission or catch you by surprise and you should be notified by the lender before it occurs.
When a hard credit check is performed, it will be recorded on your credit report for up to two years, causing your credit score to drop by a few points. However, the impact of a hard credit check tends to fade over time.
Does a soft credit check show CCJ?
In short, yes. CCJs are added to a public register and soft credit checks reveal information that is already publicly available.
This can affect your ability to get credit as some lenders might not be willing to enter into a credit agreement with you while you have an active court order.
Remember, just because it’s called a soft credit check, it doesn’t mean it won’t pick up on anything. It will show your personal details, existing credit accounts, details of anyone you have financial links with, missed or late payments, and public record information, including any CCJs, IVAs or bankruptcies issued against you in the last six years.
Soft credit searches vs hard credit searches: What are the main differences?
The difference between a soft credit check and a hard credit check might seem obvious, but it can help to delve deeper into the different ways in which they differ.
We’ve outlined the key differences between soft and hard credit checks below:
Purpose
One of the main differences between hard and soft credit checks is what they are used for. For example, a soft credit check is typically used as a preliminary measure to check your financial history before you formally apply for credit while a hard credit check is usually done after you submit an application.
Before applying for any type of credit, it’s advised to check your credit score to ensure you’re aware of anything that could potentially stop you from getting approved. This won’t have an affect on your credit score and can prevent you from being rejected, which can cause your credit score to drop.
Credit impact
As previously mentioned, soft credit checks don’t affect your finances or appear on your credit report. This means that lenders won’t know if or when a soft credit check has been carried out by you or anyone else.
Contrastingly, hard credit checks show up on your credit report and lower your credit score as they indicate that you could be struggling financially and seeking credit. However, the impact of a hard credit check usually lasts no longer than two years.
Visibility
Soft credit checks are only visible to you and the person who carried out the search while hard credit checks are added to your credit report and are visible to anyone viewing your financial history. No matter how many soft credit checks are carried out and for what reason, your credit score will remain unchanged.
With increased visibility of your financial habits, lenders will use the extra information revealed in a hard credit check to help them decide whether or not to give you credit.
Consent
Because they leave no trace on your credit report, soft credit checks can be carried out without your consent regardless of whether or not you already have an established relationship with that company.
Hard credit checks, on the other hand, require your formal consent first. Only once you’ve given the lender permission to carry out a thorough investigation of your financial history can they perform a hard search.
How long does a CCJ stay on your credit report?
From the date a CCJ is issued against you, it will stay on your credit report for six years.
The only time a CCJ can be removed from your credit report is if you pay the full amount owed within one month of receiving the judgment and you write to the court with proof of payment. Paying it after one month has passed can get the CCJ marked as satisfied on your credit report but it won’t be removed.
During this time, anyone viewing your credit file will be able to see you have a CCJ. This can make lenders wary of giving you credit as a CCJ proves you’ve struggled with debt in the past and it’s unlikely you’ll be able to handle another payment.
Once six years have passed, the CCJ will automatically drop off your credit report regardless of whether or not it’s been paid. When this happens, your credit score will gradually improve and you’ll find it easier to get approved for credit.
How does a CCJ impact your credit score?
A CCJ can have a significant impact on your credit score as it proves that you’ve continually ignored a debt to the point where your creditor has sought legal action and the court has had to intervene. But what is the journey from a CCJ to a damaged credit score?
Firstly, once your CCJ is made official, it will be recorded on the Register of Judgments, Orders, and Fines. The three credit reference agencies in the UK (Experian, TransUnion and Equifax) use the information on the register to update your credit report.
Any evidence of a CCJ will lower your credit score as it negatively impacts your creditworthiness (your ability to make repayments based on your financial history). Lenders will also view you as a high-risk borrower which will subject you to higher interest rates and stricter terms and make it difficult to get approved altogether.
All of this can make it challenging to get most types of credit, including a mortgage, credit card, personal loan, mobile phone contract, car finance, payday loan, or even a bank account.
How can I check my credit score?
Whether you’re preparing to apply for credit or want to check your report for errors, it’s important you know how to access your credit score.
The three credit reference agencies can provide you with a copy of your credit score. Here is a brief guide to how the process works depending on which credit reference agency you use:
Experian
Experian is the most popular credit reference agency in the UK. It offers three different products depending on how much information you want to access and how often you want to view it. To view your credit score for free every 30 days and to compare loans, you only need a free account.
However, if you want a copy of your credit score every day, you can upgrade to an Identity Plus account for £10.99 a month. This will also give you access to a wide range of financial tools, including web monitoring and fraud alerts.
Lastly, to access the full range of tools available, you’ll need a CreditExpert account for £14.99 a month. As well as a daily credit score, you’ll receive a whole host of other benefits, including expert advice on how to improve your finances and dedicated call support.
TransUnion
TransUnion allows users to access a copy of their credit report in one of two ways: through their website or one of their trusted partners.
The easiest way is to request a copy of a statutory credit report, which displays credit information but not your credit score or any other details that might help you understand the reason behind the information held on you.
They also partner with several other organisations, such as Credit Karma, Checkmyfile, and TotallyMoney, which all offer similar services with additional features. The cost and level of information displayed differ depending on which service you choose.
Equifax
Equifax also offers a tiered membership system. Like TransUnion, you can access a copy of your statutory credit report to give you a brief overview of the information contained in your credit report.
Alternatively, you can request to see a detailed view of your credit report and score with a Credit Report & Score account, which is free for the first 30 days then £14.95 per month. This product also includes a range of protection features to help safeguard your information from fraud.
The Friends & Family Plan costs £22.95 per month and gives you all the benefits of the Credit Report & Score account but for up to three users, saving you up to £240 per year. It can be used by spouses, partners, parents, children, friends, or housemates as long as each user is aged 18 or over.
How can I improve my credit score?
Whether you have a CCJ or just want to improve your chances of getting approved for credit, it’s important to do anything you can to boost your credit score.
Here are some quick actions you can take to improve your credit score:
Register to vote
When you register to vote at your current address, your details are added to the electoral roll (or electoral register). Most lenders use the electoral roll to confirm you’re a real person who lives at a real address.
If the information you provide in your application matches the information about you on the electoral roll, lenders can verify your credit history and your credit score will be boosted. Staying at the same address for an extended period can also show stability, which can make you more creditworthy in the eyes of a lender.
Check your credit file
Checking your credit file can help you identify anything that might be unfairly dragging your credit score down. Credit reference agencies won’t notify you of any mistakes on your credit report – it’s your responsibility to check for errors.
If you stumble upon an entry that doesn’t look right, notify the relevant credit reference agency with proof of the mistake as soon as possible. They will then investigate your complaint and update your credit report as necessary, possibly increasing your credit score in the process.
Limit your credit applications
The more credit applications you make, the more it will look like you are reliant on credit. Lenders will be able to see this when they carry out a credit check on you and might reject your application because they think you won’t be able to afford your monthly payments.
Remember, a hard credit check will be made every time you apply for credit. If you have multiple rejected applications, your credit score will suffer.
Conclusion
County Court Judgments (CCJs) show up on soft credit checks as they are publicly available information. This means that, if a lender was to perform a soft credit check on you, they will be able to see you have a CCJ and might reject your application based on this information.
The main difference between a hard and soft credit check is what they are used for. Typically, soft credit checks are used to determine whether you’ll qualify for a certain credit product while hard credit checks are used after you’ve formally applied to check your eligibility for specific products and terms.
To check your credit report for CCJs, you must go through one of the three main credit reference agencies. Each credit reference agency has a unique range of products that can be used to view your credit score, all with their own processes, costs and limitations.
