If you’ve been served with a CCJ, it means the court has decided you owe a debt and you must repay it as per their instructions.
However, while a CCJ can provide you with a way to repay your debt, it can have a negative impact on your credit score and make it difficult to access credit for several years.
What is a CCJ?
A County Court Judgment (CCJ) is a type of court order available in England, Wales, and Northern Ireland that may be issued against you if you’ve borrowed money from a person or business and they have taken you to court in an attempt to get you to repay debts you owe.
Usually, a creditor will apply for a CCJ if they have tried to recover the debt from you on multiple occasions and don’t believe you’ll repay what you owe. If the court sides with your creditor, they’ll issue the CCJ and order you to pay the money back in full or in instalments.
The first you’ll hear about a CCJ is when you receive a letter in the post outlining how much you owe, who you owe, how to make payment, and the deadline by which to make payment. This letter will also give you a chance to dispute the CCJ if you think the claim was issued incorrectly.
It’s important to respond to a CCJ as soon as possible and in a calm and professional manner. Ignoring a CCJ will result in further legal action being brought against you – even if you don’t believe you owe the debt.
How does the CCJ process work?
County Court Judgments (CCJs) follow a certain process. We’ve outlined each step in more detail below:
Letter of claim
The first step in the CCJ process is receiving a letter of claim, which is a ledocument warning you that legal action is imminent if you don’t make up for the money owed within a certain period (usually 30 days).
It will give you a number of options to reach an agreement depending on whether you admit to owing the debt or want to dispute the claim.
Under a legal framework called the ‘pre-action protocol for debt claims’, creditors must send you notice in the form of a claim letter before initiating court action to give you a chance to decide how you’re going to respond.
Default notice
The next step in the CCJ process is receiving a default notice warning you that your account is at risk of defaulting (being shut down). This will happen if you don’t respond or fail to reach an agreement within 30 days of receiving a claim letter.
The default notice will explain how to respond and what legal action will occur if they don’t hear from you before a certain deadline.
For credit agreements regulated by the Consumer Credit Act, lenders must send you a default notice at least 14 days before they start legal proceedings against you.
Claim form
If you and your creditor are still unable to reach an agreement after a claim letter and default notice, you’ll receive a claim form in the post informing you that a CCJ is being lodged against you.
In most cases, you’ll only have 14 days to respond to a claim form before a CCJ is issued.
The claim form will come with a reply form enclosed which you must complete, providing details of your income and expenditure. This is to help the court determine how the debt should be repaid and at which rate.
Judgment
The court can send you one of two judgments: a judgment by instalments (where you repay the debt in monthly payments) or a judgment forthwith (where you repay the total debt at once).
If you don’t respond to the claim form, the court won’t be given details of your financial situation and could order you to repay the debt in full, which you may not be able to afford.
This is why it’s important to cooperate at each step of the process – you may be able to ask the court to reassess your repayments after they have been issued but this is not a guarantee. Ignoring a CCJ can also lead to further action being taken against you and this could lead to High Court Enforcement Officers visiting your home and removing goods to repay the debt.
How long does a CCJ stay on credit report?
If you’ve failed to reach an agreement and have received a CCJ as a result, it will be added to your credit report from each credit reference agency for a total of six years. It will also be added to a public register called the Register of Judgments, Orders, and Fines for six years.
The only way to stop a CCJ from appearing on your credit file for six years is to pay the full amount owed within one month of receiving a judgment. Alternatively, a CCJ will be automatically removed after six years regardless of whether you pay it off or not.
If you pay off the debt in full after a month, it won’t be removed from your credit file or the public register but will be marked as ‘satisfied’. This can show lenders that while you’ve had a CCJ, you’ve now settled the debt and can be trusted to borrow credit.
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How will a CCJ impact my credit rating?
Having any form of court order on your credit report will have a significant impact on your credit rating, and a CCJ is no different.
This is because it indicates that you’ve struggled to repay money in the past and could potentially default on other credit agreements, putting lenders at risk of not getting the money they’re owed. This could also make other processes more complicated and time-consuming if an employer, landlord, or insurance company identifies a CCJ on your credit file.
During the time a CCJ is on your credit file, you’ll find it challenging to find a lender willing to give you credit after they check your credit history. This may mean you don’t get a personal loan, mortgage, phone contract, or even a bank account for up to six years.
However, specialist lenders exist to help individuals with poor credit scores due to CCJs get a mortgage with the best terms for their circumstances. There are also various things you can do to improve your credit score once six years have passed and the CCJ has been removed from your credit file.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
How can I improve my credit rating after a CCJ?
Once a CCJ has been removed from your credit file, it’s crucial you take steps to boost your credit score as soon as possible – especially if you want to get a loan or a mortgage in the near future.
The good news is, there are various things you can do to get your credit score back to its pre-CCJ level. We’ve provided a few examples below.
Check your credit report
One of the first things you should do in the months following a CCJ is check your credit report. If you spot any mistakes or outdated information, you should contact the relevant credit reference agency and ask them to update their records as soon as possible.
Checking your credit report regularly can help keep you up to date with your financial situation and ensure your credit score accurately reflects your circumstances. Something as simple as rectifying a wrong address could significantly boost your credit score.
Register to vote
Some people assume they’re automatically registered to vote but this isn’t true. If you’ve never voted or have recently moved home, for example, you may need to re-register your details online, which only takes a few minutes.
When you register to vote, your electoral details are added to your credit report. This can help credit reference agencies match up your name and address and confirm that you are who you say you are, ruling out identity fraud.
Pay your bills on time
The easiest way to show lenders that you’re a responsible borrower is to continue to pay your bills on time and in full. The longer you consistently make payments, the more your credit score will improve over time.
Keep an eye on the due dates for your utility bills and if you struggle to remember, set up recurring payments to ensure they’re paid automatically.
Avoid further credit if you can
The months after a CCJ is a crucial period for your finances and you should avoid doing anything that could damage your credit score further during this time. If you apply for multiple loans or credit cards within a short period, your score will likely decrease – especially if your applications are rejected.
Making a note of your applications and the dates you applied can also help you keep track. If you’re getting multiple rejections, find and why and don’t reapply until you’ve rectified the problem.
Conclusion
If you’re struggling with your debt repayments and have been served with a CCJ, you may be wondering how long it will stay on your credit report and continue to affect your credit score.
From the date you receive a CCJ, it will stay on your credit file for six years, regardless of whether you pay it or not during this time. However, if you pay the debt in full within a month of receiving the CCJ, it will be removed from your credit file and the public register as if it never existed.
Having a CCJ on your credit file will make it difficult to get approved for most forms of credit, from a personal loan and a mortgage to a phone contract and a bank account. It’s important to take steps to improve your credit score after a CCJ.
