Do Wages Garnished Appear on a Credit Report?

Anybody can find out about your wage garnishment because it is a public record, but it may not affect your credit rating. However, a garnishment can make it difficult, or at least more expensive, to acquire a loan. If you already have a wage garnishment, you probably cannot stop it, but you can prevent future wage garnishments.

Identification

The national credit reporting bureaus do not list wage garnishment orders on credit reports, even though they collect information on other public records, such as bankruptcy and civil judgments. However, the fact that you have a wage garnishment order in your name likely means that you have several late payments on a debt that have wrecked your credit rating before the garnishment order went into effect.

Debt-to-Income Ratio

Most loan applications ask you to list any debt obligations, even those not considered a traditional debt, like wage garnishment. Lenders often want to see a low proportion of debt obligations to income more than a high credit rating. Once your debt-to-income ratio reaches 36 percent or more, you usually enter a lender's high-risk category, according to Erin Peterson of Bankrate. Creditors can garnish up to 25 percent of your wages. If you make $1,000 a month and have monthly debt payments of $250, for example, a garnishment of 25 percent of your income takes your debt-to-income ratio from 25 percent to 50 percent.

Considerations

When a lender sees a garnishment order listed under your debt obligations, it may make an informal judgment about your credit. For example, it may assume that you have a hard time paying debts, even when you have an income that supports the loan. Some credit accounts that require too much administration to delve in a person's financial history, such as a credit card, may not ask about specific liabilities.

Prevention

Never ignore a debt so long that a creditor feels it must force payment by taking you to court. Offering the creditor something, even if it is only a few dollars each month, likely avoids a lawsuit. It costs money to file a garnishment order for each check, and many companies do not want to deal with the legal system, so the lender probably will agree to an installment plan, suggests Consumer Credit Counseling Service of Orange County.