How Does a Judgment Affect My Credit?

Like a lot of things in the world of credit scoring and credit reporting, the subject of judgment and its impact on the credit is frequently misunderstood. There are numerous myths about judgments that complicate the problem. If you are confused on how judgment impact or affect your credit, below are some of the things you should know:

When judgments have been paid, the court would update the judgment’s status and file what is referred to as a judgment’s satisfaction. One of the common misunderstandings regarding reporting of satisfied judgments is they will be eliminated from the credit report of a consumer prior to the seven-year credit reporting statute of limitations. However, for consumers, this kind of idea is not true. Satisfied judgments will remain on the credit reports of consumers for seven years from the judgment’s date that was filed initially by the court.

Even if many consumers find this disappointing that satisfied judgments might continue harming their credit for a lot of years, there are some benefits of paying off judgments. Take note that unpaid judgments don’t only harm the credit scores of consumers, yet they carry added risk to be re-filed. Aside from that, unpaid judgments accrue interests like some debts. The interest rates differ, yet it isn’t unheard of to have judgments accruing double digit interests annually.

The rules of credit reporting for judgments varied from the rules that would apply to original debts. FCRA or Fair Credit Reporting Act states that the judgments should be eliminated from the credit reports after 7 years from the day it was included or until the statute of limitations has expired.

Judgments may hang over your head for a long time. Statute of limitations for collecting debts using judgments differs by state. It might get worse as most states enable creditors to renew judgments and others enable different renewals. The state requirements for renewal may vary. You might have to consult lawyers to see which of the statute applies to your judgments.

It is true that your credit is affected by judgments remaining on credit reports. FICO basically considers judgments as negative, whether it’s unpaid or paid. But, judgments would have lesser negative impacts as they age. You must also be concerned with how and when creditors might use judgments to collect the debt. There are several states that enable judgment creditors to collect using the wage garnishment. It also appears your state allows judgments to be renewed. Therefore, your creditor might have more years to collect on your debt.

If you’re in a position to make payments on debts, you might consider contacting creditors to see if you could work out payment arrangements on the terms. Once you come to agreements, get that in writing before you make payments.

Through paying your debts, the judgments will be satisfied. Aside from that, you won’t need to worry about your creditor using that judgment to collect debts. However, if you are still confused about judgment and its impact to your credit, it might be wise to ask for professional assistance. How Does a Judgment Affect Credit?