We borrow personal loans to gap the bridge between our expenses. But sometimes, we meet more uncertainties that make it difficult for us to repay the loan that we have taken. You must have heard a thousand times that if you continuously miss repayments, you may receive a County Court Judgement (CCJ). But do you know what is a CCJ and how does it work? How should you respond to the legal court order that you have received?
What is a CCJ?
A County Court Judgement is an order that you receive from the court to repay the money you owe to your loan provider. A lender has the right to take legal support to recover their money. You have to respond to the letter by the date that is mentioned in it. The letter will also include the following details:
- Who you owe money to
- The total amount you owe
- Any other fees associated
- How to pay back i.e., at one go or in monthly instalments
- A deadline
You will receive a Court Claim Form consisting of all this information. If you do not respond to the claim within 14 days, you will receive a CCJ.
How will a CCJ affect your credit score?
It is considered as a serious financial mistake and credit score will go for a toll if you receive a CCJ. Even if you pay off the debt, a CCJ is likely to stay on your credit report for 6 years. Lenders and banks assess your credit profile to decide whether to give you a loan or credit card. When loan providers find a CCJ on your report – they generally do reject the loan application. That is because a CCJ indicates that lending money to you is a risk.
Suppose, you had an excellent credit score and then you receive a CCJ. Your credit score will fall to the fair category, even to the “poor” category. You will lose around 600 points – which is not healthy for your credit rating.
It can be said that a CCJ significantly impacts your ability to get a loan.
Is it possible to remove a CCJ from a credit report?
Yes. It is possible to remove a CCJ from a credit profile and for that, you have to contact any of the three Credit Reference Agencies (CRAs). To enable a CRA to remove a CCJ from your credit report, you have to prove that:
- You repaid the debt within 1 calendar month of receiving the CCJ.
- The courts cancelled your debt after you raised a dispute.
- An insurance company was responsible for it.
If you pay the debt within 1 month, you can write to the court and get the judgement removed from the register. And if you repay the debt after a month, you can get the record of the judgement marked as “satisfied”. Lenders who will assess your credit profile will see that CCJ but will also see that you have successfully repaid the debt.
How to improve the credit score after you receive a CCJ?
Your credit score will improve as the CCJ gets older. But you have to ensure that you are managing other debt responsibly. There are a lot of things that you can do to improve your credit score:
- Pay all your bills on time
- Register on the electoral roll
- Check your credit report regularly
- Keep your credit utilization low
- Open new accounts only if you need it
- Clear your existing debts
- End your financial association with your spouse, friend, family member
Make sure you borrow well within your limits so that you do not have to face any unpleasant situation. Receiving a CCJ can also add to your stress. Get in touch with your lender and explain your financial condition to them if you think you cannot make the payment on the due date. Remember that help is always available. Contact a free debt advice service as they have trained professionals who can help in sorting out the financial problem.