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Why a CCJ Doesn’t Mean You Can’t Get Credit
Everyone has things they may have regretted doing in the past when it comes to their finances.
Whether it was completed using a £1000 overdraft to make misguided purchases, maxing your credit card limit on countless luxuries you couldn’t really afford or just simply not making your repayments on time on a high-value loan.
Hopefully, none of those exact examples sounds like you, but if you did make some financial decisions in the past you now regret, you may have ended up with a CCJ against your name.
So, what happens now that you want to apply for credit? Well, the situation may not be as bad as you might think.
What Are CCJs?
A County Court Judgment (CCJ) will normally be registered against you if you get into problems making repayments.
For example, if you continually miss repayments on a loan with a lender and cannot come to a suitable agreement for the arrears, the lender can take legal action as per the credit agreement.
Being served court claim forms won’t be the first instance the lender contacts you, as they have to send you a warning notice first.
This would normally be a default notice that makes you aware of what you need to pay and when it needs to be resolved. The CCJ is then served if this is ignored or a suitable time frame has not been agreed.
If you have a CCJ, you will be making regular repayments to settle the amount owed. The risk at this stage if payments are missed with a CCJ, is that more legal action can be involved.
Hopefully, you’ll be maintaining the CCJ repayments without any further issues, especially if you’re now thinking of applying for further credit.
The good news is, if you are maintaining the CCJ terms and you have the disposable income to afford further lending, there are lenders available willing to help.
Who Can Help?
When you start to look for lending options again, you will find that because of your credit rating, you will probably have a poor score and most lenders will not be able to help.
When a CCJ is served, unless you have managed to settle the debt within 30 days, it will on your credit file for six years.
This means it will make it very difficult to find lenders willing to offer you further lending, such as trying to get a mortgage, credit card or personal loan.
Even trying to open a new bank account you will find to be extremely difficult. However, there are lenders specializing in CCJ loans that are designed to offer the help you need.
What You Should Do Before Applying for Lending Again
Before you consider looking for further lending, you should carefully consider if your situation will benefit from doing so.
After all, you do not want history repeating itself by taking out another loan and struggling to make the repayments.
The best thing to do first is to fully audit your finances. This sounds more tedious than it should be as you’ll just need to list what your current income is and current monthly expenditure.
By doing so, you’ll be able to see your disposable income that is left after all your main outgoings, including existing debts and your CCJ.
If you’re left with money to play with each month, then you can start to see if you can afford more borrowing.
If your disposable income shows very little or nothing left over, then further borrowing would not be advisable.
Are There Other Options?
When you have a CCJ, choices are limited when looking for any further borrowing. This is because of the effect it will have on your credit rating.
As well as specialized CCJ loans, you may find some credit cards designed especially for anyone with a very low credit score.
It’s always advisable to look at all your options to get the best overview of what’s available to you. You should be able to find a lender, whether it’s for a loan or credit card, that will be willing to help in your situation.
But remember, any further lending should be carefully considered as any further declined applications will have a negative effect on your credit file, making it even more difficult to apply for borrowing in the future.
Maintaining your CCJ repayments should be your main focus and ideally, you’ll look to pay this off first before looking to venture into the loan market again. Improving your overall financial health is the goal in the end.