How does it affect you?
The Sethi Partnership Solicitors
This article explains what you can do to avoid a Judgment affecting your credit rating.
There are three credit reference agencies (“CRA”s) in the UK who keep a “credit file” for you. They are “Experian”, “Equifax” and “Callcredit”. To protect your credit rating you need to respond to any claims promptly and be aware of what is on your credit file.
If you need help with a credit problem due to a Judgment, please contact Cormac Cawley on 020 88 66 6464 or by e-mail on firstname.lastname@example.org.
Most Judgments are listed against the debtor on the official Register maintained by Registry Limited (“Registry”). The CRAs note such Judgments on your credit file. You can make a “data subject access request” to a CRA to find out free of charge what is on your credit file. If the data is incorrect, you can ask the CRA to change it, and that can help improve your credit rating.
The Rules about the Register can be found in “The Register of Judgments, Orders and Fines Regulations 2005” (Statutory Instrument 3595 of 2005) (“the 2005 Regulations”). A copy of the Regulations can be downloaded by clicking on this link: –
When a lender carries out a credit check on you, they see your credit file and will give you a lower credit score for each Judgment, which means you will be refused credit, or you will need someone to act as your guarantor.
Of course, the best way to avoid any Judgment is to stop any creditor taking you to court by coming to an agreement which means there would not be any Judgment. However, if you break the agreement then the matter could end up in court, which could result in a Judgment against you.
The writer acted for the Claimant in Smeaton –v- Equifax Plc  EWCA Civ 108, a Court of Appeal case about the duty of CRAs to maintain accurate data. The claimant had been declared bankrupt in 2002 but the court rescinded (legal reversal) the bankruptcy that same year. The initial bankruptcy was noted by Equifax on the claimant’s credit file, but it was not told about the rescission as the court had no duty to tell CRAs about it. In 2006, Equifax gave a lender a negative credit rating for the claimant on the basis that he was a former bankrupt. An accurate credit file should have shown no bankruptcy data. The court decided that it was down to the claimant to check with the CRAs to ensure they held accurate information. The lesson from this case is to check your credit file regularly but particularly before you apply for any credit.
The following are some tips about avoiding a Judgment affecting your credit rating: –
- If you owe any money, it is important to make sure your creditor knows your current address. When you move, ensure your post is forwarded to you by someone reliable, such as the Royal Mail’s redirection service.
- When a creditor takes you to court a Claim Form is “served” by the court which it does by sending it to you by first class post. If the court uses an older address, you won’t know about the Claim Form or any Judgment which results until it is too late, or someone does a credit check on you.
- If you receive a Claim Form, you have 14 days from the “date of service” to put in a response. If you don’t respond your creditor can ask the court to enter a Judgment.
- The courts send details of Judgments to Registry for immediate noting on the Register. The CRAs receive details of such Judgments and update your credit file accordingly.
- If you find out about a Claim Form after a Judgment has been entered you may be able to apply to “set aside” the Judgment but the court will only do that if you have a defence to the claim and it considers that there should be a trial of the case. If you want the Judgment set aside you need to make an application to court and pay a fee of £255. However the application may take more than 30 days to come before the court. If the Judgment is eventually set aside the court must tell Registry and it will no longer appear on the Register.
- It is very difficult to persuade a commercial creditor to agree to set aside a Judgment even if you pay off all of the money you owe them as they will not wish to be involved in “credit repairing” or “credit washing”. In other cases, it may be possible to reach a settlement where you make a payment to the creditor and they sign a Consent Order which is approved by the court and which directs that the Judgment be set aside by consent. Once set aside the Judgment must be removed from the Register.
- If you find out about a Judgment and pay it off within 30 days of the date of the Judgment, you have a right to have it cancelled and removed from the Register. It will then no longer appear on your credit file. However, you should then check with each CRA to make sure your credit file has been updated.
- If you or the creditor make an application to the court for the Judgment to be paid by instalments, then the Judgment is exempt from registration under Regulation 9 (c) (i) & (ii) of the 2005 Regulations.
- If the Judgment was entered more than 30 days ago and you cannot get the Judgment set aside, you can try to get the Judgment noted on the Register as “satisfied”. To achieve this, you must pay the Judgment off and ask your creditor to confirm that in writing. You can then ask the court to direct Registry to mark the Judgment as “satisfied” on the Register. The CRAs should then amend your credit file, but you should check that they have done so. While the satisfied Judgment will still appear on your credit file, your credit rating should be better, but this will depend on what potential lenders make of how long it took you to satisfy the Judgment debt.
The main lessons to be learnt from all of this are (i) to keep on top of any letters which come from creditors and (ii) try to reach an agreement with any creditor. If you do end up being taken to court, try to settle with the creditor before they obtain a Judgment. If a Judgment is entered against you, work out if you have a defence and try to get it set aside by the court. See if you can persuade your creditor to sign a Consent Order. If none of these work and you cannot get the Judgment cancelled by paying it off within 30 days, think about applying to the court for permission to pay it by instalments. If the Judgment is older than 30 days try to pay it off as soon as possible.
If you need help with any Litigation Matters; please contact Cormac Cawley at The Sethi Partnership Solicitors.
T: (0)20 8866 6464
The Sethi Partnership Solicitors I The Barn House I 38 Meadow Way I Eastcote I Ruislip I Middlesex I HA4 8TB
“This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.”