How do I apply for a credit card with a CCJ?
1. Satisfy the CCJ
Unless you clear a CCJ in full within 30 days of the judgment, then it will stay on your credit file for six years. It can reduce your credit score by around 250 points and will seriously affect your ability to get credit. But it’s not the be-all and end-all. There are certain lenders, including ourselves, who work with people who have CCJs (though the older it is, the less it will impact your eligibility).
To boost your chances of getting a credit card, and to avoid any further legal action, it’s best to stick to the terms of the CCJ, and not miss any payments.
Then once you’ve paid it off, you can send proof to the court and ask them for a Certificate of Satisfaction (this costs £15). Also, make sure you ask them to update your CCJ status from ‘unsatisfied’ to ‘satisfied’ on your credit report.
These two actions above will prove to lenders that you have cleared the debt in full, which may work in your favour when it comes to getting credit in the future (with no guarantees).
After the six years have passed, check your credit file to make sure the CCJ has been completely removed. If not, you’ll need to ask the credit reference agencies to update it for you. Any mistakes could lead to the CCJ impacting your credit file for longer than it should.
2. Avoid ‘hard searches’
A hard search is carried out when you make a formal application for credit. Too many hard searches made within a short space of time can impact your credit score and your ability to obtain credit. This applies whether your application is accepted or not.
Making multiple applications around the same time can give lenders the impression that you are in financial difficulty. This can put them off, as they don’t want to make your situation any worse.
3. Check your eligibility
Make sure you use eligibility checkers to see if you’ll be accepted before you apply.
Here at Ocean Finance, we use QuickCheck. It only performs a ‘soft check’ on your credit file, which means it won’t leave a footprint and it won’t affect your credit score, but we can tell you if you’re eligible for our credit card.
4. Only borrow what you can afford
Only borrow what you can afford to repay. Make sure you don’t take on more credit than you can handle. Otherwise, your credit history could be further damaged if you can’t meet your future repayments. This is particularly important if you are still in the process of repaying your CCJ. Further legal action could be taken against you if you miss payments towards it.
For example, if you don’t maintain payments following your CCJ, then your creditor could instruct bailiffs to seize goods. Or they could apply for a charging order to secure the debt against your property. They could even request an attachment of earnings order, where payments are automatically deducted from your wages.
Can I still get a credit card while a CCJ is on my report?
A CCJ will stay on your credit file for six years from the date of judgement and it will limit your options. But there’s nothing stopping you from checking if you are eligible for a credit card in the meantime. Whether you are accepted mostly depends on the lender’s criteria and your financial circumstances.
Generally, lenders want as much reassurance as possible that you can afford to repay them. They will typically use your credit history and past financial behaviour to predict your future behaviour. So if you have a poor credit history, lenders may see it as risky to lend to you, in case you can’t repay them. But there are some lenders, including ourselves, who specialise in bad credit credit cards.
It’s useful to shop around and use eligibility checkers. As mentioned above, they can indicate if you’ll be accepted before you apply, without impacting your credit score.
How long after satisfying a CCJ can I get credit?
If you can, it’s probably wise to wait at least six months after you’ve satisfied your CCJ before you apply for credit. This gives you some time to start rebuilding your credit history, by maintaining your repayments (on time, every time). Also, applying too soon could give lenders the impression that you are struggling financially, which could put them off.
Bear in mind, that there’s no guarantee that your application will be accepted after six months have passed. Again, every lender uses their own criteria, and it also depends on your individual circumstances. It can take a while to improve your credit score and your chances of acceptance. There is no magic number in terms of the number of months or years it can take.
What other options are available?
If you need to borrow more, you could consider taking out a bad credit loan instead. Or you could look into getting a pre-paid card that you load with small amounts and pay off in full each month. As long as you maintain your repayments on time, every time, you will gradually build up your credit history using one of these cards.