Money Tips Daily - How to Check Your Credit Rating and Avoid County Court Judgements (CCJ's) and Defaults

Welcome to Money Tips Daily. Today I want to talk about something that can have a huge impact on your life, your credit rating.

Check your credit rating regularly and protect it by never allowing your rating to be compromised by not paying a bill or defaulting on a credit card, which can stay on your record for up to six years.

Protect your credit rating with your life!

To check your credit file and obtain a credit rating you can apply to one of the main credit reference agencies in your country. In the UK the big three are www.Experian.co.uk, www.Equifax.co.uk and www.CallCredit.co.uk, which can supply a free report or charge a small fee.

You can pay a monthly subscription for ongoing reports, but I would go for the basic report to start with.

You can also obtain a combined report covering all three credit agencies, which will often hold different information on you depending on which company reports activity.

You should check your credit file at least once a year, as errors will affect your ability to obtain credit, take out a mortgage or mobile phone contract or open a bank account.

If you discover something on your file which should not be there, like a County Court Judgement (CCJ) or a Default on a credit agreement or utility bill you can dispute it with the company or go to the Financial Ombudsman or Citizens Advice. 

Companies also report late payments to the credit agencies, which means you could be refused a mortgage even though you have never defaulted on a bill or been taken to court. 

For instance, if your credit card bill is due on 20^th of each month and you manually pay it over the counter at your bank each month on 19^th, you are technically late, as it takes several days for your payment to reach the card company.

You will also be reported for paying utility bills late and for credit searches when you apply for credit even if you do not proceed with the transaction. Some mortgage lenders have been known to decline a mortgage application just because the person had a late payment in the last 3 years!

If you are involved in a legal dispute in the County Court and lose you have less than a month in which to settle the debt awarded to the other side by the judge, otherwise the debt will appear on your credit file as a CCJ for six years even if you pay by instalments or later clear the amount outstanding.

Bonus Tip 1. Pay bills by direct debit to avoid missing a payment, which will appear on your credit file.

Bonus Tip 2. If you are in dispute over a small utility bill always pay it and argue about it afterwards. If you refuse to pay, the company may issue a Default against you, which they can do without going to court. The Default could stay on your record even if you are later proved to be in the right. 

In my days working in banks and financial services I have met countless people who allowed their credit rating to be messed up over a £50 water bill. The water companies were particularly aggressive in going after debtors.

Tomorrow, I’ll give you some tips on how to build up your credit rating.

Listen to this episode on Anchor: Money Tip Check Credit Rating.