What is a CCJ?
- A CCJ (Country Court Judgement) is where someone is taking legal action via a court order when the person(s) owing them money have not responded to requests for the debt to be settled. If you have a court order registered against you, this means the court has decided you owe the person money
- The judgement will explain how much you owe, when you need to pay the money back, who to pay the money to, and how to pay.
- You can request to pay these in instalments or appeal for the claim to be cancelled. ‘Setting aside’ the CCJ, as this action is known, normally requires a fee and evidence you do not owe the money to the person that has registered the CCJ against you.
- CCJs will remain on your credit file for 6 years, making it more difficult for you to obtain credit in the future.
What is a Default?
- A default is where the credit provider has cancelled your account due to a failure of payments, This is normally actioned after 3-6 months of missed payments but will depend on the lender terms and whether you have engaged the lender to discuss repaying the owed monies. There is no minimum or maximum threshold when registering defaults.
- A default will remain on file for 6 years from the date the default was registered, which can make it more difficult for you to obtain credit in the future.
What is the difference between a default and a CCJ?
- A default is where you have not met the lender’s repayment terms and, as a result, they have registered a default against you, whereas a CCJ is normally where you owe a person or company, not a credit provider. CCJs could be for a parking ticket or an unpaid invoice, for example.
What is bankruptcy?
- This is a legal process to instigate proceedings to seek relief against debts owed, leading to your possessions and assets being shared out to those you owe money to. Depending on your circumstances you may also be required to make payments for up to 3 years, to repay as much of the debt owed to your credit providers.
- It impacts on your ability to secure any form of credit and some banks may be unwilling to provide you with a bank account.
- Bankruptcy is published on a register.
- The bankruptcy will be registered on your file for 6 years, this can vary depending on when you have been formally discharged from your bankruptcy
What is an IVA?
- An IVA stands for an ‘Individual Voluntary Arrangement’
- Unlike bankruptcy. whereby you are unable to repay debts, an IVA is where you agree to enter into an agreement with your credit providers to repay monies owed. This is agreed by the court under a legal process so both parties are held to account
- Agreements normally last up to 5-6 years and will need to be put in place by a qualified practitioner, such as an accountant, who will charge fees to make these arrangements
- IVAs, like other adverse credit, will remain on your file for 6 years from the date it’s registered, assuming the IVA is completed by this time
Can I get a mortgage if I have bad credit?
Yes, is the simple answer. However, as you’ve probably guessed, there are more bridges to cross before you can secure approval from a mortgage lender if you have a bad credit history..
Essentially, if you’ve had ‘bad credit’ like missed payments, a default or a CCJ, the majority of lenders will view you as higher risk. Often the mainstream high street lenders will have a credit-scoring system and will give you a pass or fail based on your credit history.
The level and severity of your ‘adverse credit’ history will impact the chances you have of acceptance e.g. a missed payment on a credit card payment over 6 months ago might be ok to still be accepted via high street lenders but multiple defaults and CCJs will require a more extensive search to find a suitable lender.
Some lenders will complete a full underwrite of your case and review it on its merits. For example, if you’ve had clean credit for 12 months and the previous problems were due to a life-changing event, there may be lenders willing to consider these kinds of situations. The majority of high street lenders aren’t set-up to complete a full review and work solely on a ‘computer says yes or no’ basis for credit-scoring purposes.
You can increase your chances of securing a mortgage approval by:
- Increasing your deposit
- Showing clean history for a minimum of 6 months
NB In some instances the lenders we work with to arrange adverse credit may charge a higher rate of interest; the levels often vary depending on your circumstances. If unsuccessful in your initial mortgage application, we can advise you on a road-map to get you in to the best possible position for a positive outcome the next time around.
Our Home Group Advisors are experts when it comes to reviewing cases and have good relationships with a wide range of lenders, maximising your chances of securing mortgage approval.
Can I get a mortgage if I have had missed payments?
Obtaining a mortgage with missed payments will depend on a few factors:
- The number of missed payments and whether the account fell into default
- How long ago the missed payments were for
- The type of account the missed payments were linked to. For example, missed mortgage payments in the past will make it more difficult to get a mortgage than if the missed payments are related to a credit card or loan.
Can I obtain a mortgage with a low credit score?
Yes, you can obtain a mortgage with a low credit score, although the factors that have brought this situation about will need to be taken into account.
The reason you have a low credit score might be down to something as simple as not having taken any credit out in the past. When this is the case, credit agencies such as Experian or Equifax will be unable to provide you with a higher credit-rating score.
Factors impacting credit score
Negative Credit Impact;
- Failure to maintain payments on credit accounts i.e. missed payments or defaults
- High credit utilisation i.e. above 75% usage on credit cards or multiple unsecured loans.
- Having a CCJ registered against you
- Filing for Bankruptcy or registering an IVA
- Not being registered on the electoral roll (to vote)
- Opening a number of credit agreements within a short period of time (normally 6 months)
Positive Credit Impact;
- Ensuring bills are paid on time and are up to date to avoid missed payments
- Being registered on electoral roll (to vote)
- Good credit utilisation i.e. clearing credit cards each month to show credit can be taken and cleared and not exceeding 75-80% of credit limits
- Ensuring personal and address details are up to date with all credit reference agencies
- Reducing the number of newly-opened credit agreements in a short period of time (normally 6 months)
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE