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The Concerning Rise in Consumer Credit

Blog post   •   Aug 12, 2017 20:14 BST

A recent article by The Guardian advised that there had been a 35% rise in County Court Judgments being issued against individuals, compared to the same period in 2016. In truth, there were more CCJs issuedagainst consumers in England and Wales last year than in any other year on record.

So what has caused this massive leap in consumer credit issues and what are the likely implications for those affected?

This data on increased CCJs could mean one of two things. Either a growing number of people are struggling to cope financially and are turning to credit to help them meet the everyday costs of living. Or, as the chairman of the Registry Trust, Malcolm Hurlston believes: “Taking together the increasing number of judgments and their declining value, we see that people whose commitments may be out of control are being identified earlier in the lending cycle.” In short, there are more CCJs because people are being made to confront their debt at an earlier stage and before it reaches out of control levels.

Concerns over CCJs

The impact of having a CCJ issued against you can be a severe negative influence on your credit rating. This in turn could hinder future access to credit, including mortgages, credit cards and even insurance products.

Most concerning within this trend is the fact that a quick Google reveals horror stories of people who have been issued CCJs without even being aware that a debt is owed, or without being the person that borrowed the money in the first place. One such example makes reference to a Landlady who, despite her impeccable financial history, was issued with a CCJ when a tenant moved out without paying their water bill. A CCJ of just over £200 was issued against her in her absence, with her completely unaware that this had happened until she was rejected in an application for a new bank account. Six weeks of phone calls and emails later and the incorrect CCJ was removed, but the stress and anxiety caused during this period cannot be dismissed.

Reducing your chances of receiving a CCJ

Although it may seem all doom and gloom, there are some easy steps you can take to minimise your risk or falling foul of overdue credit and managing the situation if you do find yourself in difficulty.

Start by making sure that any creditors are always supplied with your current address, to ensure that any correspondence reaches you as quickly as possible. If you fail to do this, then not having received the paperwork regarding a potential CCJ may not be a strong enough reason for it to be overturned.

Equally, if you feel you have been wrongly or unfairly issued with a CCJ then you can apply to have the judgement set aside. This is a fairly complex process so should only be undertaken if you genuinely believe your case to have extenuating circumstances or if the CCJ was issued to you due to fraudulent use of your identity.

What will my CCJ mean for my future?

If the situation arises and you do find yourself with a financial ruling against you, then you can still take certain actions to minimise the effects of this.

As this CCJ is almost certain to negatively affect your credit score, do all that you can to ensure no other factors are dragging it down. Making sure you are registered on the electoral roll and paying off the CCJ as soon as possible are two straightforward steps to take that will minimise the impact on your credit score. This in turn will help when applying for a new credit card or mortgage.

Insurers can perceive those with a poor financial history as being a higher financial and moral risk to insure, due to their history of not being able to pay back borrowed money. Although receiving insurance from mainstream providers can be an issue, there are specialist insurers out there who will provide cover for you even if you have a less than perfect credit history. For home insurance, companies such as CoverBuilder will be able to help you, while companies such as Insurance Revolution offer quotes for non-standard car insurance.

If trends continue to follow previous patterns then the number of people being issued with CCJs is likely to rise once again. Therefore, increasing the awareness on how to minimise the impact of these ruling should help people to deal with them in the most effective and time rich method possible.