A county court judgement (CCJ) being made against you can cause significant problems when applying for finance, loans and often for mortgages.
The reason for this is that a CCJ is a court order demanding money that has been owed be paid, with potential legal penalties for those that fail to apply.
If the full amount is not paid within a month, it can appear in a publicly accessible database for six years and appear on credit reports, with a consequential major impact on a credit score.
This can affect your chances of getting a competitive mortgage, but is it impossible to get a reasonable mortgage with a CCJ against you?
The short answer is no, and if you can pay the judgement within 30 days it may not even have much of a prejudicial effect, although any defaults that caused it might damage your credit score.
It does get more complicated if the CCJ is on your record or you have received a judgement in default. This appears on your record, and much like a bankruptcy declaration can cause a drop in credit score and lender confidence.
By how much depends on a range of factors:
How long ago the CCJ was – the longer it has been since the CCJ the easier it tends to be to get a mortgage, with it removed from your record in six years.
How large the CCJ was – any amount over £2500 can seriously complicate a mortgage application.
When it was settled – if the CCJ is settled quickly it does not appear on a record, but even if not, how quickly the debt is paid back will matter to some lenders.
How clean your record is outside of the CCJ – if you minimise credit applications, pay back all agreed payments on time and avoid further defaults, it can help you to rebuild your credit score.
Depending on your situation, you may have to provide a larger mortgage deposit to decrease your loan-to-value proportion and pay a higher mortgage interest rate, as well as provide proof of stable income.
