Do Judgments Count on a Credit Report?

A legal judgment is serious business. Both private parties and commercial creditors have a right to sue when you have debts you either will not or cannot repay. The result of a successful nonpayment lawsuit is a court order, commonly called a judgment, which not only orders you to pay, but also gives your creditor additional ways to collect on the debt. In addition, once the court files a judgment against you, it will affect your credit report for many years to come.

The Facts

A judgment not only counts on a credit report, but Equifax, Experian and TransUnion, the three major credit reporting agencies, have public records sections in your reports that contains only this type of information. Whether you pay in full today or in the future, once a judgment is in your credit report, it stays there for seven years from the date of filing.

Effects

The effect a judgment will have on your credit report depends on how soon you pay the judgment in full, the overall state of your credit report and time. If the judgment is valid and you have no legal reason to dispute the amount, the sooner you pay in full, the better. A judgment adds to your total debt load, which counts for 30 percent of your credit score. In addition, although credit reporting agencies list judgments in a special section, they count as part of your payment history, which, according to the Fair Isaac Corporation, makes up 35 percent of your credit score. If your payment history is otherwise good, a judgment will still have an effect but not as much as if your credit report also lists late payments on other accounts. The effect a judgment has will lessen over time, especially if you take care of the balance due immediately.

Solution

No one can remove a judgment, paid or unpaid, from your credit report -- Not you and not a credit repair agency, no matter what it's advertisements may say. Under certain circumstances, however, you can attempt to vacate the judgment, and if you are successful, the court will order credit reporting agencies to remove it from your credit report. If you can give the court a reasonable excuse as to why you did not appear in court, such as not receiving a summons notice, or if you can provide a proper explanation as to why you do not owe the debt, such as a debt resulting from identity theft, the court may vacate the judgment. Otherwise, your only option is to wait the seven years and monitor your credit report to ensure credit reporting agencies delete this information at the appropriate time.

Considerations

A good reason to consider paying a judgment in full as soon as possible is that, in addition to the original amount of the debt, you will also be responsible for paying court costs the creditor incurs. In addition, creditors can add interest to an unpaid judgment. While the amount varies depending on the state in which you live, an average is about 10 to 12 percent. The longer you wait, the more you will owe, the more difficult it will be to pay, and the greater effect it will have on your credit report.