How Just Mortgage Brokers Can Help You
A poor credit rating can be caused by any of a variety of events, such as missed repayments on loans, late payments on cards and outright payment defaults. Even the lack of a credit history can make life extremely difficult when you need to apply for a mortgage. These various ‘bad credit events’ affect your credit score in different ways.
One of the most detrimental things you can have linked to your name with regard to your credit status is a County Court Judgment, or CCJ, which can hamper your chances of getting a credit card, opening a bank account – or be finding a mortgage.
What is a CCJ?
A County Court Judgment (CCJ) is a court order made in England, Wales or Northern Ireland that can be registered against you if you fail to make your agreed repayments. CCJs can be issued against both individuals and companies.
Bear in mind that by the time you get to this stage you will have had quite a bit of correspondence from your creditor. As well as regular bills and reminders, there will have been a formal letter warning you that if you do not repay the debt – or do not get in touch to make arrangements to pay it – legal action will commence. It will also explain what steps you can take to stop proceedings from going ahead.
If you take no action at this stage, the next thing you will receive will be a County Court claim form. It is essential that you respond to this promptly. If you do, you can explain your financial circumstances, which will then be taken into account when a judgment is made. If you do not, you might be ordered to pay the amount in full, immediately. You must also respond, of course, if you dispute the debt, as you will need to put your side of the story forward.
If the court decides there is a debt to pay, you will be sent a judgment detailing:
– How much you owe
– How you should pay (in full or by instalments)
– The payment deadline
– Who you should pay
At this point, if you pay the debt in full (including any interest and court fees) you will avoid having a CCJ recorded against you. If you do not, then it will be entered on the Register of Judgments, Orders and Fines, which means it will also show on your credit record.
Can I get a bad credit mortgage?
When do CCJs expire?
Records of judgments remain on the Register of Judgments, Orders and Fines – and therefore also on your credit report – for six years.
From our own research we have found that 71% of people do not know how long a CCJ takes to be forgotten and, what is more surprising, 40% of people thought a CCJ was a permanent mark on their credit record.
The good news here is that this is not the case, all bad credit marks are removed from your credit file in the end and you do not even have to wait for this to happen before being considered for a mortgage. With the right expertise and guidance it may be possible for you to get a mortgage sooner than you might have expected.
As we mentioned above, if you pay the debt in full (including any interest and court fees) within one month of receiving the judgment, you will not even have a CCJ recorded against you. If you clear the debt more than one month after receiving the judgment, it is marked in the CCJ register as ‘satisfied’, so people will know you have paid.
How bad are CCJs for my credit file?
Credit reference agencies gather information about how people manage their credit and debt payments and they make that information available to lenders, to help them make decisions as to who to extend credit to.
They gather two main types of information: credit account information and public information.
Credit account information relates to how much people owe the various lenders they have accounts with, and how they are managing those accounts.
Public information relates to bankruptcies, debt relief orders, individual voluntary arrangements (IVAs), and administration orders; it also includes information held on the electoral roll, and the Register of Judgments, Orders and Fines.
CCJs, therefore, fall under the heading of public information. Anyone searching the CCJ register will see the information relating to it.
Whenever you apply for a financial product like a mortgage, personal loan or even a mobile phone contract, lenders will use the information contained on your credit file to assess whether you are creditworthy. A CCJ will remain on your credit record for 6 years, but if it has been marked as ‘satisfied’, they will know that you settled your debt. CCJs after 6 years, typically have no impact on your credit score.
What is My Credit Rating?
How do I know if I have got a CCJ?
If you have been refused credit in the past and you are not sure why, you can access the Register of Judgments, Orders and Fines for a one-off fee of £4.00 and do a CCJ check against your name. Alternatively, you could ask to see a copy of the information held on you by the credit reference agencies.
We often receive enquiries from people asking ‘How do I know if I’ve got CCJs?’, so do not worry if you are not sure where you stand. Maybe the circumstances around the debt were not clear, or for whatever reason you were unable to deal with the paperwork at the time, or perhaps the related correspondence never reached you in the first place.
Most people will receive a notification from the courts outlining the details, but if you are not sure, or if you cannot remember how long ago it all happened, you can always find out by searching the CCJ register.
Can I get a mortgage with CCJs?
The good news is that yes, it is possible to gain a mortgage when you have one or more CCJs on your credit file. However, there are a number of key elements that will impact on a lender’s decision. These include:
- How recently the CCJ was registered: the older a CCJ is, the better. If it was registered more than three years ago then you stand a better chance than if it was registered within the last year. One thing that will help if you have a recently registered CCJ is having a good sized deposit.
- The number of CCJs: if you have one or more recent CCJs, then your options are more limited than if you have just one CCJ registered a number of years ago. As a general rule, if you are seeking a mortgage with a high loan-to-value (LTV) ratio, then a lender will not want to see more than two CCJs registered in the last two years. If you have a bigger deposit then they are likely to be more flexible, provided the CCJs are over twelve months old.
- How much the CCJ was for: some lenders have rules regarding the value of CCJs that affect the LTV ratio they are prepared to offer. Incidentally, that does not mean if you have larger value CCJs you cannot get a mortgage, but you should expect to have to accept a lower LTV – say 65% to 75%.
|Age of CCJ||Possible LTV Effect|
|Less than 12 months||If the CCJ was registered within the last twelve months, then it should be a maximum of £1,000 for you to be considered for an 85% LTV mortgage.|
|Within 24 months||If the CCJ was registered within the last twelve to twenty-four months, then it should be a maximum of £2,500 for you to be considered for an 85% LTV mortgage.|
|+2 Years||If the CCJ is more than two years old then the amount will have little effect. If it is more recent, however, the value will have an impact on any possible loan offer.|
- Whether the CCJ is marked as ‘satisfied’, and when it was satisfied:if your CCJ is satisfied you will have a bigger pool of lenders to choose from, but if it is not you should still have options.
|Status of CCJ||Impact on lending|
|Satisfied CCJs||those lenders that insist a CCJ has been satisfied fall into two categories: those that insist it has been satisfied for a minimum of 12 months before a mortgage application is made, and those that are happy so long as it is satisfied prior to the application.|
|Unsatisfied CCJs||if your CCJ remains unsatisfied – and you do not want to part with the money to see that it is – then the date it was registered is important. There are specialist lenders who will consider your application, but they are likely to insist the CCJs are at least two years old.|
All mortgages, irrespective of the credit status of the applicant, are subject to an affordability assessment as part of the process of working out what amount of mortgage will be offered.
For people with CCJs on their credit record, this may be assessed differently, especially if the CCJs are recent and/or unsatisfied. This may mean that while you are accepted, you are not allowed to borrow as much as if you had no CCJs – and the mortgage may also cost you more, in terms of interest and fees
Bear in mind, however, that most issues are surmountable, and a specialist mortgage broker can help navigate the obstacles and options.
Repair your credit score
If you have a CCJ against your name, all is not lost. Not only can we canvass the market to help you find a great deal on a bad credit mortgage with a CCJ, but there are also a number of steps you can take to improve your credit rating.
Take a look at our tips to improve your damaged credit rating and access the very best mortgage rates.
Speak to Just Mortgage Brokers
At Just Mortgage Brokers, we have a specialist bad credit team that endeavour to help our clients secure affordable bad credit mortgages with CCJs and other adverse credit events. Those with mixed credit histories are usually best served by specialist lenders that cannot be found on the high street. With years of experience working with a network of bad credit lenders across the UK, we know exactly where to turn to find a mortgage to suit the particular needs of each and every client, regardless of their credit history.As unlimited market brokers, we have access to a wide section of the market, which means we are not tied to products from any particular lender. This impartiality and unlimited access to the market gives us the very best chance of obtaining a competitively priced bad credit mortgage with a CCJ.