How do CCJs, defaults and bankruptcy orders impact on the chances of getting a loan?

If you have been issued with a CCJ (county court judgement), defaulted on previous loan or credit card repayments, entered into an IVA (individual voluntary arrangement) or been declared bankrupt during the past 6 years, your chances of getting a personal loan from a mainstream provider are pretty much non existent.

All are regarded as a strong indication that as a borrower you would be at high risk of defaulting and not making the repayments. Your credit score will be impacted to such an extent that it is highly unlikely a mainstream lender will be prepared to take you on it books. Lenders are able to see details of CCJs, defaults, bankruptcy orders and IVAs  for six years from the date they were issued as this is the period they will remain visible on your credit report.

Specialist loan lenders for people with CCJs and defaults

However, there are some specialist lenders who offer loans for people with CCJs, defaults and people who have previously entered into an IVA, although the interest rates are notably higher when compared to products available to people with good credit scores. At present if you have an impeccable credit history you could borrow £8,500 at an interest rate as low as 4.5% APR* with Santander. However, with a low credit score, the interest rate is likely to be around 20% APR* or more. (* figures correct as of Feb 2014) . Please use the search form above to compare offers.

At certain times during our lives many of us experience financial hardship for one reason or another. Redundancy, long term illness, bereavement, going through a divorce or a reduction in earnings can all cause major pressures on our finances. Sometimes people take on more debt than they can afford to pay back and get into difficulties keeping up with repayments.

The longer ago the infringement took place, the more likely a lender may be willing to take you on. For instance if you were issued with a default notice for missing a mobile phone contract payment 5 years ago and since then have been keeping your finances in order, this is less likely to impact on you than a bankruptcy order issued only 18 months ago.

Figures from the Registry Trust, the body which operates the Register of Judgments, reveal that a total of 536,700 CCJs were issued during 2013, an increase of 3.5% on the previous year.

Process of getting a CCJ

A CCJ is the result of legal action brought by a creditor (someone you owe money to) in a County Court.  Before you receive any documentation from the court, the creditor must have first issued a default notice. This is a formal letter which tells you how much you need to pay to bring the account back up to date. You will be given at least 14 days to pay it and if you do so, no further action will be taken.

Following delivery of the default notice, the debt maybe passed on to a debt collection agency, but a creditor can apply for a CCJ as long as they have issued a default notice. The court will send out paperwork and you will be required to acknowledge the debt and will have the opportunity to put your side of the story. The court will then make a decision and if they decide that your creditors are rightfully owed money, a CCJ is issued against you. You will have a period of one calendar month to clear the debt and if you do it should prevent the CCJ from being listed on your credit file.

If you fail to clear the outstanding debt during the one month period, the CCJ will show up on your credit file and remain listed for a period of 6 years. If you do clear the debt during the 6 year period,  CCJs can be marked as 'satisfied'. However, lenders will still be able to see from your credit file  that you had a CCJ awarded against you and are likely to remain reluctant of lending you money.

Many people fear that having a CCJ means they are on a universal ‘credit blacklist’ which will prevent them from ever being accepted for a loan ever again. This is not true as there are some specialist lenders with less stringent acceptance criteria who may extend you a loan but with a higher rate of interest in return for the privilege.


Bankruptcy effects people from all walks of life and there have been well reported examples of celebrities including Atomic Kitten star Kerry Katona,  nineties soap and pop star Martine McCutcheon and more recently, Westlife singer Shane Filan all filing for bankruptcy. Bankruptcy is regarded as a last resort option and is looked upon extremely negatively by lenders.

The period of bankruptcy usually lasts for 12 months and during that period, the financial affairs of the individual will be significantly restricted.  After a year the person will be discharged from bankruptcy and effectively, this means they are free again to apply for credit. 

However, after being discharged from bankruptcy, the court’s Bankruptcy Order will remain on the individuals credit report for six years. Because of this, it is likely to be difficult to obtain credit from a mainstream lender for some time – although specialist lenders may help, but any loan you are offered is likely to be at high rates of interest.