So you’ve been slapped with a CCJ? At this moment it can seem pretty hopeless getting anything on finance, we understand. But there isn’t a reason to lose all hope, after all, CCJs are relatively common and for many people with a CCJ it’s circumstantial, it’s not necessarily the whole picture of their financial history.
See our dedicated service page if you need information on getting car finance with bad credit.
What is a CCJ?
CCJ stands for County Court Judgement. It’s something that is issued to people who fail to meet the repayment details on a financial agreement. It doesn’t matter how much the financial agreement is for, missing payments and failing to fulfil a contract you’ve entered into – even on someone’s behalf – can end in a CCJ.
It’s important to note that a CCJ will stay on your record for six years, meaning that for the foreseeable future, getting any type of financial agreement could be difficult. It doesn’t matter how much money you earn, how little you’re trying to borrow or how long the duration of the agreement is. Unfortunately, most lenders will look at your credit report, see that CCJ and reject your application. But does that mean you can’t get a loan ever again? No.
Satisfying your CCJ
A CCJ will certainly prevent you from getting a car finance deal with most lenders, but fortunately they only last for six years and not a lifetime. That being said, there are ways to satisfy your CCJ. If you pay your debt within the first month of the CCJ being ordered it can be marked as satisfied.
For lenders, they will still be able to see your CCJ for the next six years, but having it marked as satisfied can increase your chances of borrowing significantly. So, just because you’ve been issued with a CCJ, it doesn’t mean you have to sit there and helplessly wait for it to vanish, if you’re financially capable – do something about it, whenever that is.
Getting car finance with a CCJ and what to expect
Don’t forget that if you’re trying to get a car on finance with a CCJ, it can be assumed that you’re not desirable to lend to. This means that finding a lender could be difficult. But it’s not impossible. You just need to consider your credit history and not overreach in terms of borrowing. That being said, there are lenders out there who will look at your entire credit history and see the bigger picture.
When you apply for credit, your profile will be pulled up and typically an algorithm will spit out a yes or a no depending on what it discovers. If you have a CCJ, you can bet that more often than not a ‘no’ will be spat out. Does this mean you should give up trying to find a car finance agreement? No. But it does mean you will have to be quite flexible.
Remember the issue is that you’re classed as being unreliable when it comes to making repayments. So there are a few things you can do to try and increase your chances of being accepted. The first is putting down a large deposit.
The larger your deposit is, the smaller the amount you’re borrowing. As the conditions surrounding your CCJ are about repayments on the money you borrow, naturally the less money you borrow, the smaller the perception of you as a financial risk. Having a larger deposit doesn’t mean you need to be putting thousands down on the car, but making more effort than the minimum can be seen as positive.
This matter should also be taken into consideration when you look at the cost of the car you’re trying to buy. Perhaps a brand new Volkswagen model priced at £30,000 isn’t the essential vehicle you need, but a second hand Ford with a few thousand miles being sold for £8,000 is a suitable enough car.
By having a larger deposit, cheaper car, and a longer length of contract, you can minimise your repayments, making them small and manageable. Some lenders will then view this as financially safe to lend to you. But really, it’s about improving your credit score.
How to improve credit after a CCJ
After you’ve received a CCJ your credit score will plummet. From this point, it’s essential to improve it. If you can’t satisfy your CCJ immediately there are certain things you can do in order to boost your score in the meantime – however we would recommend satisfying the CCJ is your first objective.
Pay your bills on time. This might seem obvious, but many people who end up with a CCJ simply forget to pay bills once too often. Set up direct debits where you can and pay every bill on time. This will let lenders know you’re managing finances well.
Keep your credit use low. This means where you’ve got items on finance, and are paying £5 a month for 12 months, perhaps consider paying the rest of the agreement in full so you’re borrowing less in the eyes of lenders.
Register on the electoral role. This is the easiest and quickest way to improve your credit score.
It might also be a good idea to sign up for a free trial for credit checks. Most approved UK credit boards will provide a 30 day free trial. Use this to help you improve your credit score, you’ll be surprised at how many little things you can do to help boost your score.
The important thing to remember is that a CCJ doesn’t mean you need to lose all hope in borrowing money, you just need to take a moment to stop and pause before you start up again. Expect that you could be paying more interest on the things you do borrow for such as mortgages and car finances, but that you also won’t be offered as much money as before by lenders. Focus on improving your credit score as much as possible with professional financial advice and then be prepared for not-so-great deals.
