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 email@example.com.
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 The claimant had been declared bankrupt in 2002 but the court rescinded (legal reversal) the bankruptcy that same year.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: –
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.
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