A lender can decide to take legal action against a borrower if they consistently fail to pay back their debts. If you are taken to court and issued with a CCJ, you will need to pay back the debt in full, or a portion of the debt by agreement. This judgement will be recorded on your credit file for six years unless you pay back your debt before the CCJ is issued.
In the past, people with poor credit and CCJs could secure bad credit mortgage or remortgage. Since the credit crunch and reform of the mortgage industry, lenders have been forced to become more responsible. As a result, getting a mortgage with a satisfied CCJ on your file has become a little more difficult.
Many high street lenders will reject people with CCJs and defaults on their file as they view them as high-risk borrowers. Others may accept your application but will request a higher deposit or offer a higher interest rate. This can mean buying a house becomes much more expensive.
If you have a CCJ on your file and would like to secure a mortgage you have two options. You can either wait six years until the CCJ drops from your credit report and start building your credit again, or you can shop around. Your credit report is just one part of the whole picture that lenders will consider when making a decision.
There are steps you can take to make yourself a safer choice, including securing a bigger deposit of around 20-30%. The more deposit you can provide, the better. You can also shop around and try niche mortgage providers who may be more inclined to work with borrowers with poor credit histories.
