How long does a CCJ remain on your credit file?

Getting a notification that you’re due a County Court Judgement (CCJ) can be daunting because it signifies a massive shift in the escalation of debt issues. But, besides the immediate financial impact and obligation, one of the most pressing questions might be how long a CCJ lasts on a credit file and how it will impact your business’s ability to function. 

It’s no secret that a CCJ is a signal to the financial world that your business has been unable to meet its financial obligations. An obvious result of this is that your reputation will suffer and that your business will struggle to get credit when it needs to. 

Here, we’ll discuss the lifecycle of a CCJ, what interventions can be put into place, and the specific steps you need to take to get a CCJ removed or mitigated before it causes catastrophic issues. 

The 6-Year Rule

Let’s discuss the timeline first. A CCJ will remain on your credit file for six years from the date of judgement. The record will be held by the Registry of Judgements, Orders, and Fines and will be accessible to the public, too. The public can access this via Trust Online. It is also automatically fed into the database of credit referencing agencies. 

Why Does a CCJ Remain on Your Credit File For 6 Years?

The fact that a CCJ remains on your credit file for six years is to be able to give lenders a long-term view of how a business is doing financially and how reliable it is in paying back its debts. It is important to remember that, although you may pay the debt back in three years, the CCJ will remain on your credit file. But it will appear a little differently: 

  • Unsatisfied: This means that you haven’t paid back your debts, and it is a massive red flag for lenders.
  • Satisfied: This shows lenders that you have managed to pay back the full amount. This will be viewed more favourably by underwriters. 

How to Get a CCJ Removed

You may not know that there is a brief period when you get served with a CCJ when you can prevent the damage from becoming permanent. This is also known as the 30-day grace period. So, how does this work? 

If you manage to pay the CCJ in full (including all the court costs and the interest) within 30 days of the judgement date, you can have it set aside or cancelled.  

Steps to Get a CCJ Removed within 30 Days

As mentioned, the way to get the CCJ removed from your credit file is to settle the entire balance with your creditor immediately. Next, you’ll need to obtain a written letter from the creditor to confirm the date and the amount paid. You’ll then need to send a letter to the court with the evidence of your payment included. The last thing to do will be to apply for a Certificate of Cancellation from the court, which will include a small administrative fee. 

If all goes well, you will be able to get the CCJ removed from the public register so that it looks as though it never existed. If, however, you miss the 30-day window, the CCJ will be locked onto your credit file for the next 6 years. This is regardless of whether you pay the debt off during the 6 years. 

Mitigating the Damage of a CCJ on Your Credit File

There may be a situation where you have discovered a CCJ on your credit file that is a few months or years old, which you were unaware of. Unfortunately, you won’t be able to delete it. You should, however, take steps to improve the status of your CCJ. 

Getting a Certificate of Satisfaction

If you have managed to pay the debt off past the 30-day grace period, you’ll still need to ensure that the court record is updated. You’ll need to apply for a Certificate of Satisfaction, which will show the status as 'paid'. It is important to remember that the CCJ will remain on the credit file.

As a lender, seeing a satisfied CCJ from three years ago on your credit file is a lot more tolerable compared to an unsatisfied CCJ. 

Can You Get an Older CCJ Removed?

But are there any circumstances where you’ll be able to get an older CCJ removed from your credit file? There are specific legal circumstances where you’ll be able to get the CCJ removed after the 30-day grace period, which usually involves ‘setting aside' the judgement using Form N24. You’ll need to prove one of the following: 

  • Lack of service: if you never actually received the original court papers.
  • A real prospect of success: If you have a genuine defence against the debt that you weren’t originally able to present. 
  • Prompt action: You took action as soon as you discovered the judgement.

H2: How Does a CCJ Affect Your Business?

A CCJ is rarely a contained issue and will often have a snowball effect across a few different areas of your business. 

Business Lending and Interest Rates

Mainstream banks will often have automated filters, so if a CCJ appears on a business credit file, the application will often be rejected instantaneously. But, if for some reason there is a lender willing to lend you the money, you'll most likely have to pay higher APR rates (5-15% higher than a business with a clean file). Also, lenders may demand personal guarantees or a charge over your property to offset the perceived risk. 

Supplier Trade Credit

If you’re looking to go down the trade credit route, lenders may have safety nets that they will most likely use if they see a CCJ on your credit file. For example: 

  • Revoke credit limits: they may demand that you pay in advance for all orders. 
  • Shorten terms: they may decide to move you from Net 60 to Net 7. 
  • Stop supply: they may also decide to stop supplying altogether because they think you are too high-risk as a client. 

Director Liability and Personal Impact

There may be times when a business director’s personal credit is protected from issues like CCJs; however, with SMEs, this is not always the case. 

  • Personal guarantees: Most small business loans will require a personal guarantee (PG), so if the business has a CCJ, the lender will be able to look at the director’s personal credit. If the director’s personal file is also negatively impacted, your chance of getting a personal mortgage or car loan may also be compromised. 
  • Director disqualification: This may be rare, but having a pattern of unsatisfied judgements can also be used by the Insolvency Service as evidence that the director is not able to manage a company properly.

Satisfied vs. Unsatisfied CCJs - What’s the Difference? 

Feature

Unsatisfied CCJ

Satisfied CCJ

Duration on File

6 Years

6 Years

Lender Perception

High Risk / Default Likely

Resolved Risk / Historical Issue

Supplier Reaction

Likely to cut off credit

Likely to keep on strict terms

Ability to Remove

Only via "Set Aside" (N244)

Only if paid within 30 days

Interest Rates

Sub-prime / Very High

Higher than prime, but improving

 

Having a CCJ on your credit file doesn’t have to be the end of your business’s journey. The key is to act within the first 30 days to try to settle all the debt so that you can get the CCJ removed. This way, the future of your business’s borrowing power remains in place. 

If you are unable to get the CCJ removed from your credit file, however, your next step to take will be to ensure it is satisfied and give an explanation if you can. If you are able to pay the debt and obtain the Certificate of Satisfaction, you’ll be able to show your future lenders that you are still responsible and that you are able to meet your financial obligations. 

Similarly, make sure that you regularly monitor your business credit score. There are instances when CCJs may be ignored because they have been sent to the wrong address or are the result of an administrative error. So, catching them early is the only way to ensure that they don’t negatively impact your credit file for the next 6 years. 

Are you looking to purchase business credit checks? Get in touch with Creditserve for more information today.