How Much Will a Paid Judgment Raise FICO Score?

Your credit score shows lenders how well you've managed credit in the past, and how well you might manage it in the future. Your credit score changes with every financial move you make and a negative remark, such as a judgment, can follow you for years. Luckily, you can help your credit score by paying that judgment off.

Judgment Basics

A judgment is the result of an unpaid debt. If you fail to pay a debt, such as a credit card or loan, for several months, the lender will try to collect the balance due. As part of the collection effort, the lender can file a civil case against you. The case becomes a matter of public record and any judgment the judge decides on will appear on your credit report.

Effects on Credit Score

Your credit score consists primarily of your total debt and your payment history. Positive remarks, such as paying a credit card payment on time, will increase your credit score. Serious issues, such as a judgment against you, will lower your credit score. Both the outstanding debt and the record of the court case will appear on your credit history and will hurt your credit score. Bankrate reports that a judgment remains on your credit report for seven years.

Paying a Judgment

You can pay off the debt through the court that handled your judgment case. Once you pay off the debt, the court should update your credit history to report the debt as paid. The judgment will still appear on your credit report. However, paying off the debt can improve your credit score. The amount of improvement depends on your credit history. If you have a long credit history with several accounts, paying off the judgment will not have as much of an effect as it would if you had a limited credit history since your credit score calculates all of your credit history.

Other Considerations

While paying a judgment will improve your credit score, it will also improve your credit report. Many lenders look at your credit report as well as your credit score. A lender might be willing to consider you as a lower risk applicant if your credit report shows you made good on your debt. As the judgment ages, it will have less of an effect on your credit report and score.