How a CCJ can wreck your finances

Some recent news items highlighted the plight of innocent people who have nearly lost their homes or suffered severe financial problems when their credit history was damaged by old County Court Judgments (CCJs) that they knew nothing about - parking ticket penalty notices that are sent to very old addresses, for example. Unpaid parking tickets, mobile phone or utility bills could result in a CCJ being made against you without your knowledge, especially if ID theft or address changes are involved. A CCJ consequently lies on your credit file like a ticking time-bomb that explodes when the individual wants to finance a new home, car or any number of financial services like a mortgage or student overdraft.

These days, pretty much every institution does a credit check on you before they offer you a deal. They do this by using one of the major credit reference agencies, who have a worryingly comprehensive view of all your personal finances. Your credit record contains all your monthly bank and credit card balances (going back years!), your repayment history, CCJs and more, and you’ve got that all-important credit rating to think about on top.

The fact that CCJs can be issued wrongly against you (eg to a very old or incorrect address, or due to identity theft), causing you serious financial damage, is an appalling abuse of our legal system. The car parking management firm Parking Eye is just one firm highlighted in this emerging trend and a class action against them threatens (or maybe hopes) to bankrupt them. A potential class action against Parking Eye is being 'crowd funded' and more details are here. Also try CCJ check.

In Britain, our credit files are only now becoming increasingly important to us. It’s worth knowing that your credit file contains a Search History: details of agencies that have ‘looked you up’.  If you open a new credit card or bank account, or finance a new mobile phone, for example, a Search will be done that will show up on your file. Having too many of these at a time can be a sign that you’re desperately thrashing around trying to raise new finance, which can give a bad impression that may result in you being turned down for deals.

Surprisingly, a credit file search is done for other routine things though, such as when looking around for house or car insurance. Your credit file will be searched to verify your identity. I found out recently that after shopping online for an insurance quote, several searches were logged on my credit file by Insurance Initiatives Ltd, Lexisnexis Risk Solutions Ltd., Covea Insurance plc and Aviva Central Services Ltd. – firms I’d never heard of. An Identification Check was also undertaken when I transferred my pension fund to someone else, as my file shows.

It’s also worth pointing out that if you phone around and ask for an insurance quote, for example, they may ask if you've already had a quote. You might say ‘no’ but in fact they could tell by looking at your credit file that other (insurance) firms have already done a search on you.

Some credit agencies like Experian and Equifax offer to sell consumers details of their own credit file, alerting you whenever there is a change (eg an unexpected loan, possibly due to ID theft). Perhaps those CCJ victims might have stood a better chance if they subscribed to such services, but you’re not to know and the chances of being hit by ID theft or an unfair CCJ are slender. Only you can decide whether you’re worried enough to want to pay for such services, but I still recommend Noddle, a free service that gives you all the info you need along with a snapshot of your current credit rating, search history and more. It’s worth checking at least every month as I described here.

Something not right on your file? Well, you can add a ‘Notice of Correction’ to your credit file to notify anyone searching your file that there is an issue that you dispute. Noddle gives more details on their FAQ here, and you can issue such a Notice (200 words max.) by writing to them.

If you’ve never looked at your record, it’s time you did: you will be stunned by the amount of information about you that is analysed by banks, insurers, pension firms, debt collection agencies and more.