CCJ Loans for Bad Credit

Updated: May 14, 2024 Author:

Key Takeaways: CCJ loans are by their very nature, bad credit loans. The fact that a CCJ has been awarded by a court, makes it a severe default, severely hindering your ability to access finance. The more recent the CCJ has been awarded, the more difficult it will be to secure a loan. Aged CCJs are commonly considered among specialist lenders. In all cases, they present the borrower as a high-risk of defaulting. Lenders mitigate that risk by charging a higher interest rate.

Can I borrow money with a CCJ?

Lenders specialising in bad credit finance understand the nuances involved with a bad credit history. A CCJ could have been awarded less than six years ago and in that time, financial circumstances can and likely will have changed. You could have been in hard times, unemployed for a period, defaulted on multiple debts, then got back on your feet and repaid the debts within a year or two. Once a CCJ is awarded, it remains on your credit report, even if you pay the debt in full. It will just be marked as settled.

The only way to remove a CCJ from your credit report is to pay the debt in full within 30 days of the court awarding a CCJ, then apply to the court to have the entry removed, obtain a certificate, and update the credit reference agencies with that.

When you need a loan – or any type of credit agreement – the CCJ can haunt you. Specialist lenders will state wording along the lines of “CCJs considered”, or “Aged CCJS considered”. This means what it says: Applications will be considered by the lender. Not guaranteed though. Most mainstream lenders will flat out refuse stating no CCJs or bankruptcies will be accepted. When you see that within a finance company’s eligibility criteria, you know not to apply there.

Firms that consider applications with a CCJ look beyond it. That’s what you need from a lender. A company that views your entire credit history and weighs its decision on your most recent account management. When they can look at your credit report and see that within the past 1 to 2 years, there is a credit building credit card being used and the balance paid in full each month, that all utilities are showing up-to-date payments, BNPL purchases have been repaid on time, credit accounts are being managed, and your overdraft is being used responsibly, it paints a good picture. In light of those things, the CCJ from 4 years back can appear as a minor blip, especially if it’s marked as settled. That shows that you didn’t ignore it, but dealt with it when you had the financial means to do so. That can only be a good thing.

How to get a loan when no one will approve you

The merry-go-round of loan refusals and applications for credit accounts being rejected stems from hard checks on your credit report. Lenders can perform two types of checks. A soft check or a hard check. A soft check is a preliminary search that gives a top-down overview of your credit status. Any CCJs will be flagged here because that information is in the public domain. Credit reference agencies pull this data in from the Register of Judgments, Orders and Fines. A soft check is only visible to you. A hard check shows on your credit history.

When you look at your credit report using any of the free credit monitoring apps/services, there is a section for “search history” that’s split into two. Hard search history and soft searches. These update every two years. Soft searches are only visible to you. This is where you’ll see what companies have looked at your credit report and the reason why. Common reasons are affordability, Quotation Searches, Identity Check, and Anti-Money Laundering (AML) requirements by some firms. Mainly gambling websites which can also show up as “gambling affordability” checks. Gambling does not affect your credit score, but, lenders will likely ask to see recent bank statements. If you’re spending excessively on gambling, they may be inclined to reject your application based on responsible lending practices.

The hard searches are what drop your credit score. However, from a lender’s perspective, your credit score is irrelevant. They have their own formulas for credit scoring applicants based on the information being reported on your credit reports. Too many loan refusals can cause your score to decrease and lenders will see what companies have already rejected your application and the date that you applied.

If you’ve had three loans refused in the past month, it can cause them to take a harder look at your credit report to identify why you aren’t being approved. The CCJ is only one reason. What else is going on? That’s what lenders will be looking at and they can glean a lot from a hard credit check. Like, how much you have as a credit limit and how much of that limit you are using. It’s the same for credit accounts, and goods on Buy Now Pay Later. It doesn’t matter if it’s not due paid until 9 months later, it’s still debt that’ll need to be repaid at some point.

The most common reason for finance being rejected is because you’re already stretching the limits of affordability. Lenders are required to assess applicants’ affordability to ensure that approving a loan doesn’t cause you financial hardship when the repayments become due. Other factors that can lead to rejections include a lack of stable employment history, a high debt-to-income ratio, or lacking stable address information – moving home regularly can indicate instability. The address information ought to be the same as recorded on the Electoral Roll, so if you’ve recently moved home and haven’t updated your address with the Local Electoral Office, that should be done first before applying for finance.

Are debt consolidation loans possible with a CCJ?

Part of the affordability assessment lenders do requires you to provide details of your income and expenditure. If much of your income is spent paying down debts with high interest rates, debt consolidation loans can make your finances more manageable. There are specialist lenders that will consider applications for debt consolidation loans with a CCJ on your credit files. The key information lenders need to know is that you can afford the monthly repayments for the duration of the loan term. When taking out a larger loan to pay multiple smaller sums, it’s crucial to identify any possible penalties from repaying the loan early as those can mount up, and actually decrease your credit score if you close the account after clearing the balance.