This week – 27th to 31st March 2017 – is Credit Awareness Week, aimed at helping consumers become more aware of how credit ratings work and how they can improve them.
Debtor rehabilitation is an important theme of Credit Awareness Week. This is all about encouraging debtors to engage with their creditors so that they can reach a settlement, which will help their longer-term credit report.
This week Registry Trust, the non-profit organisation that maintains registers of judgments issued against consumers and businesses who fail to pay their debts, has launched a new initiative to encourage creditors to notify Registry Trust directly when a judgment is satisfied.
Why will that help?
A judgment against a person has an adverse effect on their credit score, which may mean either inability to get credit or higher interest rates. The judgment will remain on their record for six years, which is a long time to have a “black mark” if the debt has actually been paid
But if the judgment is marked as “satisfied” once it has been paid, the debtor’s credit rating will improve. Currently only 14% of judgments were marked as satisfied in England and Wales.
Registry Trust estimates that upwards of 100,000 people will have better credit ratings as a result of this initiative. In Scotland and Northern Ireland, 21,000 people a year could be immediately affected for the good because only 4% of judgments are marked as satisfied (due to legal differences).
What else can be done?
As a next step, throughout the UK, Registry Trust will be ready to receive information from lenders about judgments which have been settled to the satisfaction of lenders.
Currently, satisfactions must be payments in full but that does not reflect modern reality and the addition of settled judgments will transform access to credit for many people.