Spotted: Shocking increases in CCJ

County court judgements (CCJs) are at a record high, according to consumer debt figures for the first few months (Q1) of 2017.

CCJs are registered in England, Wales and Northern Ireland when someone can’t pay a debt they owe. It is a long road from taking out credit to getting a CCJ; lenders – usually banks, credit cards, store card companies – need to go through a collections route first. Only when the debt is still outstanding can they apply for a CCJ, which makes it harder for customers to get credit or a mortgage in the future.

Data from The Registry Trust – which records judgements on behalf of the Ministry of Justice – shows that 912,389 CCJs were registered in 2016. In contrast, only 734,205 were registered in 2015 – a shocking 24% increase in one year. The situation consumers are facing is getting worse.

In Q1 2017, there were 298,901 debt judgements, a 35% increase on the same period in 2016. That is nearly one-third of the 2016 total and the highest rise in CCJs over a three month period in over a decade. The average value of CCJs is decreasing, down to £1,495 per person, from £3,662 in 2008, a sign that lenders are getting more aggressive at chasing down outstanding debts.

Worrying Patterns

The total value of CCJ debt was £1.7 billion in 2016, with another £462.5 million registered in Q1 2017. Anyone watching the economy should recognise this as a worrying sign.

Registry Trust sees this as an aggressive move by lenders to attempt to collect arrears sooner rather than later. CEO of Creditfix, Pearse Flynn said that “Any rise in the number of County Court Judgements (CCJ) being registered against consumers should be cause for concern – but one as large as 35 per cent in the space of a year, and nearly 50 per cent in two years, could point towards a more aggressive shift in the way that creditors are chasing outstanding debt.”

For the last four years, CCJs have been on the rise. As a pattern, this shows us that lenders are lending more, but not everyone they consider creditworthy can truly afford the extra credit – or when their circumstances change, and they get into difficulty, they are eager to slap them with a CCJ. In turn, consumers tagged with bad credit get charged higher interest rates or get stuck in a cycle of repaying old debt for years, even decades.

The system is stacked against those who would benefit from extra financial health. No one should be penalised for mistakes or choices from years ago when current salaries make debt consolidation and a little extra help easily affordable.

A Fairer System?

Banks, credit cards, payday lenders and consumer finance partners aren’t the only ones that can lend money in the UK. Not-for-profit, member run Credit Unions can make responsible lending decisions, with previous blots on their credit file, but good recent financial health. When a loan is verified through an employer – which is the case when you apply through FairQuid – they can take other things into consideration, such as salary and how long you’ve been employed.

FairQuid loans are more affordable. Loan payments come directly from your salary, which means they take the affordability of this into consideration too. Loans through credit unions also automatically include a savings account, which means, over time, your financial health keeps getting better.

Don’t let your debt get the better of you: Now is the time to take control of your finances, with FairQuid: Your Money, Your WayFind out more and apply here.



Broken Heart, Broken Credit: Making Sense of Credit Scores

Loans, store cards, credit cards and mobile phone contracts seem like a great idea when you are in a happy relationship.

But when things go wrong, which can happen at any age, monthly payments can turn into hazardous liabilities that can trip you up years later. Taking out credit – which includes phone contracts – for someone else is always risky, even when you are married.

Even if someone else is giving you the money to cover the payments, the debt is still yours. You are legally responsible. One such example is a guy who used his good credit score to get a phone for his girlfriend at university. Let’s call him Andrew. He took out a 12-month contract for her, but six months later, they broke up, and both of them moved to different flats.

A Series of Unfortunate Events

All of the bills were going to their former address. He didn’t change the billing address, and she stopped paying him. He wrongly assumed she would take over payments – which anyone can do, even without access to the account or needing to pass security questions. Maybe she did for a while, but at some point, she stopped paying, and he wasn’t paying anymore.

It took another six months for the debt to catch up with Andrew. When it did, it was over £150, including late payment charges and collection agency fees. He paid it and assumed the situation was dealt with. It was hard enough breaking up with his girlfriend, never mind the added pain of paying off her phone contract.

He was wrong to assume the debt situation was over.

Six years later, after climbing his career ladder, promotions and stable employment, Andrew’s credit has finally recovered. It has taken six years of being careful with money and not being able to get much credit for the one ‘black mark’ to stop affecting his ability to get loans, credit cards, store cards and a mortgage.

Making Sense of Credit Scores

Andrew is not alone. Millions of people – for one reason or another – have limited access to credit as a result of bad scores preventing us from accessing finance many of us can, on current salaries, easily afford.

For many people, credit scores are like a black box. Black boxes constantly record numerous data inputs on planes. In the same way, credit reports record data from numerous sources: our bank accounts, credit cards, phone companies, utility companies, store cards, mortgages, and any applications to apply for more credit.

Most of us don’t know our credit scores. However, you can find out easily enough – using ClearScore (free), Experian (free trial – but remember to cancel) and other free tools. But if you don’t know, yet want to apply for something, such as a loan or credit card, you run the risk of damaging your credit further thanks to marketing from banks and other companies that suggest you will be successful.

Aggressive tactics and offer target those most vulnerable, and more likely to need credit quickly. When people are denied, it can be tempting to try payday lenders, and others that offer money at an extortionate rate. When your credit has been damaged, but you are rebuilding, and in steady employment, payday lenders should not be your only option.

There is an alternative solution, thanks to FairQuid: Your Wages Your Way. If you’ve been employed for at least one year at your current employer, you can apply for a loan through credit unions that take employment history and salary into consideration.

We don’t base everything on credit scores. You also get an automatic saving account as part of this loan: starting from a minimum of £10 per month, with payments for both coming directly from your salary, making budgeting easier. All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here.