Can I get car finance with a CCJ?

Managing your finances isn’t always easy. With the cost-of-living crisis squeezing budgets and unexpected challenges to face like redundancy or a period of illness, it can be hard not to fall behind with our debt repayments.
 
If this sounds familiar, you’re not alone – and you’ll get no judgement from us.
 
In some cases, creditors might choose to take further action against you to try and recover their unpaid debts. This will usually result in a County Court Judgement – CCJ for short - being awarded against you.
 
Unfortunately, having a CCJ listed on your credit report can make it harder to find car finance, but it’s not impossible.
 
Read on to learn more about a CCJ can impact your car finance eligibility:

What is a CCJ?

A CCJ can be issued against you if you live in England, Wales, and Northern Ireland and have an outstanding debt to be repaid. It’s a type of court judgement designed to enforce payment of debts that have fallen into arrears.
 
When you receive a CCJ, you’ll be given a deadline of when the full amount will need to be repaid. The judgement will also detail how much you owe and how you can pay it.
 
Applying to the courts for a CCJ will typically be a last resort for creditors, and you’ll receive a warning letter 14 days in advance. If you can afford to pay before the CCJ is officially issued, then you might be able to avoid having it added to your credit report.
 
Once the CCJ has been issued, it’ll usually stay on your credit report for up to six years.

Can I get car finance with a CCJ?

A CCJ isn’t just an order to repay your debt, it tells the world (or the people who look at your credit report, at least) that you’ve had trouble paying your debts in the past and could be an unreliable borrower in the future.
 
Understandably, this risk can make it harder for you to find car finance. Lenders like to feel reassured that they’ll get their loans repaid, and a CCJ is proof that you might not be able to offer that all-important peace of mind.
 
Even so, that doesn’t mean you need to give up on getting car finance if you have a CCJ on your credit report. In fact, there are lenders who specialise in offering loans for people with less than perfect credit history (although you might pay more in interest for the privilege!)

Can I get car finance with a satisfied CCJ?

Once you’ve repaid your debt, the CCJ will be declared ‘satisfied’.
 
Unfortunately, that doesn’t mean it won’t still impact your finances. While it’s great that you’re back on track and no longer have that debt hanging over you, the CCJ will remain on your credit report for up to six years.
 
That said, the fact that you have made a payment can help lenders feel more positively towards you. They’ll likely approach with caution – you still have a poor credit score, after all – but might be open to offering you a loan as you’ve now honoured your obligations and settled your debts.

Why might lenders be interested in a CCJ?

Lenders look at a whole range of different factors when deciding whether to offer you a loan, but your credit score is arguably the most important.
 
This three-digit number helps lenders understand how you might act as a borrower (it’s more reliable than a crystal ball). The higher your score, the lower the risk you pose and the more likely it is that you’ll be approved for finance.
 
Having a CCJ on your credit report won’t just negatively impact your credit score, but it also acts like a bright red flag warning lenders that you’ve struggled to make payments in the past and your creditors were forced to seek help from the courts to recoup the debt.
 
There’s no judgement here; we know there are many reasons why you might fall into arrears, but the fact remains that a CCJ makes you a riskier prospect and can lead some lenders to reject your finance application.

Will a satisfied CCJ affect my credit score?

Congratulations – now you’ve paid your debts, your CCJ will officially be marked as satisfied.
 
Unfortunately, this doesn’t mean it’ll disappear off your credit report – at least not yet. In fact, no matter whether the debt gets paid or not, your CCJ will stay on your report and continue to impact your credit score for up to six years.
 
The only exception to this rule is that if you manage to pay the debt within a month of the CCJ being issued, you can apply directly to the credit reference agencies and ask for it to be scrubbed from the record early.

How can I improve my credit score after a CCJ?

Credit scores aren’t an exact science, but they’re also never fixed in place – just because yours is in need of some TLC right now, it doesn’t have to stay that way.
 
There are several steps you can take to boost your credit score over time:

Register on the electoral roll

One of the quickest and easiest ways to build your credit score is to register to vote. You can do this online in just a few clicks – and don’t forget to repeat the process each time you move house.

Make your payments on time

While it’s not always easy, keeping on top of your bills and making payments on time, every time is a sure-fire way to improve your credit score.

Keep credit utilisation low

Maxing out your credit cards each month isn’t great for your credit score (or your wardrobe space!) Sometimes it’s inevitable, but if you can keep your balances at less than 30% of your total credit limit, your score could increase.

Space out your credit applications

Each time you submit a credit application, a hard credit check will be carried out to assess your eligibility. These checks are visible on your credit report and can stay there for up to two years. Having too many hard checks in a short time can negatively impact your score.

Check your credit report regularly

You can check your credit report with each of the three main credit reference agencies for free. Getting into the habit of checking your report helps you spot any mistakes (and get them corrected quickly).

Be cautious with financial links

When you take out a type of finance with someone else, whether that’s a joint loan, credit card, or joint car finance, you’ll be forging a financial link. This means the way they act as a borrower can also impact your credit score.