CCJs and credit: Mortgages, loans and credit cards
A CCJ will hurt your ability to get credit. There are companies offering so-called CCJ mortgages, CCJ loans and CCJ credit cards – but the interest rates will be much higher.
Credit and a CCJ
If you have a poor credit history, lenders will be reluctant to take you on – or they may charge you higher interest than other customers.
A CCJ against you is a sign of previous credit problems.
But it doesn’t rule you out from getting credit altogether.
The longer ago the CCJ was, the less that lenders take account of it. CCJs for large amounts of money are worse than ones for smaller amounts. And satisfied CCJs (where you have a certificate of satisfaction) are less of a problem than unsatisfied ones.
So if you’ve had a CCJ against you, it’s important to do a CCJ check on the register to make sure it is accurate.
CCJs aren’t the only thing lenders take into account. They look at your overall credit history as well, plus how much you owe and so on.
Don’t take on too much credit
Don’t take on more credit than you can afford. If you’ve had problems in the past, think carefully about borrowing even more.
Be particularly careful of consolidation loans.
They may be secured on your home, putting it at risk. And they may swap short-term loans for long-term ones – although you’ll pay less each month, you’ll pay more in total over many years.
Using credit sensibly can help to re-establish yourself as a reliable borrower. But if you’re taking out credit because of financial problems, talk to a free debt help charity like Step Change Debt Charity first.
Getting a mortgage with a CCJ
It is possible to get mortgages with a CCJ.
High street lenders may take you on, depending on the details of the CCJ. And there are mortgage lenders who specialize in so-called CCJ mortgages.
However, you’ll usually pay higher interest rates than with mortgage companies with no credit problems – up to about 5% higher is normal.
What to watch out for
- Redemption penalties When taking out a CCJ mortgage, make sure the extended redemption penalties (which mean you can’t switch lenders for several years without paying a large fee) aren’t too long.
- Missing mortgage payments And beware of penalties for missing payments.
- Check your chances Talk to a broker or the lender about your chances of getting accepted for a mortgage before applying.
- Remortgage later And when you’ve had the mortgage for long enough, look into remortgaging. If the CCJ is no longer on record, and you’ve shown you can handle credit, you’ll be eligible for ‘normal’ deals again.
- First step As a first step, check your CCJ and make sure it’s accurate. Is it marked as satisfied if you’ve paid it off? How long until the six-year time limit is reached?
Getting a loan with a CCJ
Loans with CCJs against your name are possible – you’re just likely to have to pay more than people without a CCJ.
What to watch out for
- Secured loans You may be forced to get a secured loan – one that puts your home up as security. This makes the loan less risky to the lender – if you can’t repay it, they can apply to have your property sold to recoup their money.
- Risk to your home Because of this risk to your home, you should think very carefully before taking out a secured loan.
Check the records To see what the CCJ records show about you, do a search here. Make sure it’s marked as satisfied if you’ve paid it. And see how long there is to go until the six-year time limit is up – the CCJ will be removed from the records at that point.
Getting a credit card with a CCJ
Some lenders use risk-based pricing with credit cards – the interest rate you’re charged depends on how much of a risk you are.
CCJs and other credit problems in the past mean higher risk to the credit card company, and higher interest rates for you.
What to watch out for
- High interest rates It’s still possible to get a credit card with a CCJ. You may have to pay a high interest rate (up to 40% on some cards), and you’re unlikely to get a large credit limit.
- Handling credit Although this isn’t ideal, it does help you establish that you can handle credit sensibly. The aim is to show this and move to a credit card with a more normal interest rate.
- Penalty charges Make sure you pay off your bill on time each month or you’ll get hit with penalty charges.
- Check the Register Run a CCJ check to make sure your CCJs are shown correctly on the register. Are they ‘satisfied’ if you paid them. How long before they’re taken off because of the six-year limit?