CCJ’s & Remortgaging With Bad Credit History

Peter Mugleston of OnlineMortgageAdvisor.co.uk advises against applying to high street lenders for home loans, or mortgages as advisors are working to targets to run a credit check and get a quick turnaround.

Not on financial products but of customers with poor credit being turned around and shown the door.

Instead, his four-part process is:

• Grab copies of your credit reports (Free with Noddle)
• Do not make multiple loan applications – especially to high street banks
• Use a broker
• Repair your credit

In addition to #2, we would add that researching the market is important because there are smaller and often local building societies willing to offer more favourable credit deals.

A broker though, that’s going to set you back, but without one, can often set you back more.

As for repairing your credit, since we know the average amount is £2,171, it may be possible to access smaller loans for adverse credit, which will work out more favourably if it allows you to pay off within a month and have the CCJ/Decree removed.

You don’t have to wait six years to remove your CCJ. As TrustOnline.org.uk explains, you can apply to have your CCJ marked as satisfied.

A satisfied CCJ on your credit report shows you have paid the balance in full. An unsatisfied judgment shows the opposite and money is still owed.

That satisfied status is a significant game changer for accessing any type of credit because even the big banks recognise it as lowering your risk to them.

In October last year, the Guardian published an article about subprime lenders, showing the interest rates as high as 8%. With mortgage rates continuing to fall in early 2016, the lowest rate comes from the Yorkshire Building Society at just 1.14%.

Bluestone Mortgages and Pepper Home Loans mentioned in that Guardian piece, would set you back nearly eight times the lowest mortgage rate. There’s also noise in the buy-to-let mortgages sector with Foundation Home Loans focusing its offering to those in the market for buy to let mortgages with bad credit.

The message is clear – clean up credit reports

A possible saving grace to get a CCJ application considered for removal…

If for whatever reason, you didn’t attend the hearing when you were issued a CCJ, you’d be issued with what’s known as a default judgment. Andrew Crisp of Mason Bullock makes a good point about applying to have the judgment set aside.

The caveat with this is that you must have a good reason for not attending i.e. you didn’t know, moved address, exceptional circumstances such as bereavement and that when you first became aware of the issue, were prompt in the redress to apply for the judgment to be set aside. If you are successful in having it set aside, it’ll be removed from your credit report.

Be proactive in cleaning up your credit report, put steps in place to rebuild your credit history by managing personal finances better. Plastics are the way to go, but NOT if you lack self-control. You need to stick to budgets, within your limits and be able to pay balances down in full every month.

If you can’t do that, do not get plastic. Having credit cards when you lack good money management is a dangerous territory.

CCJs aren’t a complete barrier to accessing mortgages. It just means you’ll need a specialist provider, possibly a broker, and will most certainly pay higher interest rates.

When you do, be sure to stick with shorter-term mortgages, as that will let you access better mortgage rates as your credit rating improves.