Having a CCJ can make it difficult to find lenders willing to approve a deal with you for car finance, mortgages and various other credit related agreements. Having a CCJ will likely go hand-in-hand with having a bad credit score, so It’s imperative that you spend time educating yourself on what a CCJ is and how it can affect your chances of obtaining car finance before you apply.
What is a CCJ?
A County Court Judgement (CCJ) can be granted against you when you fail to repay any debts that you owe. This is common practice across the UK and the following steps will be completed before you are issued with one:
- Debtors will issue you with a warning letter declaring how much you owe them
- If you cannot afford to pay this back they will move on to legal action
- A judgement will be passed that details how much you owe and how you’ll need to repay it
How long does a CCJ last on your credit file
A CCJ will remain on your record for 6 years once it has been issued. This means that even after you’ve paid off what you owe it can linger and make it difficult to get car finance or other credit deals. This is one of the things that will bet taken into account when your credit score is being calculated and may result in you having a bad credit score. As it remains on your file even once you’ve paid it off, it can still negatively impact your chances of getting approved for credit agreements.
Can I get Car Finance with a CCJ?
Car finance and CCJs can be a complicated mix. At these times it’s even more important than usual to ensure that you have a regular income and having a car could be key to this. We understand that everyone’s situation is different and we’d encourage you to use our car finance calculator to see what you can afford.
If you have a CCJ and are interested in applying for car finance then we’re happy to help you find the best option for you. Applying will allow you to find out your eligibility for car finance, even with a CCJ. If you want to understand more about car finance for people with bad credit or find out about IVAs check out our guide.
Managing your finances and avoiding a CCJ
While it’s best to pay off debt quickly it doesn’t stop many from struggling to meet debt repayments. If you are one of those struggling we would recommend getting advice through a reputable debt advisor. We’d recommend someone like the debt charity Step Change.
Often you can come to an agreement over a repayment plan without having to go through court action.
Managing your finances efficiently and paying off your debts quickly and ideally early can reflect very well on you. It shows lenders that you can budget effectively and are a sensible borrower.
Keeping a monthly budget is of utmost importance, especially if you’re considering entering a new credit agreement. You need to know your own finances and capabilities before you show lenders what you can offer.
How to lessen the impact of a CCJ on your credit score
If the worst does happen, and you end up being placed on a CCJ there are a number of ways that you can lessen the impact.
- If you pay up promptly, within one month of the CCJ being issued, then it won’t be recorded on your credit report
- If you are in a situation where the CCJ can be disputed, and you can prove to a court that you shouldn’t have been issued one in the first place, you may be able to get it cancelled. You should only take this route if you are sure thing.
- Talk to a credit agency, like Experian or Equifax about your credit file and how the CCJ is affecting it. They may be able to offer you suggestions and advice on how best to minimalise the impact.
- If an insurance company was responsible for the debt, or more than 6 years have elapsed and it’s still on your file, you can contact a credit agency and get them to remove it. The same is true if you followed the first points above, and paid it off quickly or managed to dispute it. Sometimes it will still be on your file in these circumstances, and you may need to contact an agency to remove it.
Otherwise, the best way to minimise the impact of a CCJ on your credit score is to take steps similar to those when improving your credit score. These steps are generally good financial practice and may well help you be approved for car finance with a CCJ.