Do Default Judgments Go on Credit Reports?

If you receive notice that one of your creditors has filed a lawsuit against you and do not respond to the notice, the court will assume that you agree with the complaint levied against you. It will grant your creditor a default judgment for the amount it requested. The judgment will then appear within your credit history and negatively impact your credit score.

Facts

After the court grants a judgment, it records the ruling in the county's public record database. A judgment appears on your credit report in one of two ways. If your county courthouse participates in the Public Access to Court Electronic Records (PACER) program, the credit bureaus will pull the judgment record from the online database and subsequently update your credit report. Regional credit bureau representatives also periodically review records from county courthouses that don't participate in the PACER program to properly update consumer credit reports.

Significance

Any public record that appears within your credit file negatively affects your credit score. Because each individual's credit report contains unique information, however, estimating the damage a judgment will do is difficult. As a rule, the higher your credit rating was prior to the default judgment, the more damage your credit score will take after the credit bureaus update your credit report.

Time Frame

The amount of time a default judgment remains on your credit report depends on how many years your state allows creditors to sue consumers for unpaid debts. According to the Fair Credit Reporting Act, if the remaining statute of limitations for debt collection in your state exceeds seven years, the judgment will remain a part of your credit history until the statute of limitations expires. If the remaining statute of limitations is less than seven years, the seven-year reporting period stands.

For example, if the statute of limitations for lawsuits in your state is 10 years and a creditor sues you after one year and obtains a default judgment, the judgment would remain on your credit report for another nine years -- until the original statute of limitations expired.

Misconceptions

Some states allow creditors the option to renew judgments and enforce them for a longer time. California, for example, has a 10-year enforcement period for civil judgments. Provided a creditor renews the judgment before the enforcement period expires, it may continue to pursue the debtor for an additional 10 years. Many consumers believe that when a creditor renews its judgment, the judgment will appear on their credit report for a longer time. This is not the case. Judgments only remain for seven years or the remainder of your state's statute of limitations. Thus, renewing a default judgment doesn't cause it to linger on your credit report for a longer time than it would otherwise.

Considerations

You have the right to contest a default judgment. If you're successful, the court will overturn its original ruling in favor of the creditor and, in the process, overturn the judgment itself. Should this occur, notifying the credit bureaus of the new court ruling will result in the judgment disappearing from your credit report. Each state has differing laws regarding permissible reasons to contest a default judgment and time limits in which you may do so.