How Much Will Paying a Judgment Help My Credit Score?

Although more than one credit scoring system exists, most businesses that check credit scores request a FICO score. Your FICO score lies somewhere between 300 and 850. Positive credit entries, such as timely payments to lenders, increase your credit score while negative entries, such as judgments, diminish your score. Sustaining a high credit score helps you qualify for a variety of goods and services and ensures that later lenders charge reasonable interest charges on new credit and loans. If a civil judgment on your report is dragging your score down, paying it off benefits your financial future -- even if it doesn't help your credit score.

Credit Score Impact

Because civil judgments are derogatory public records, paying off a judgment does not benefit your credit. Your credit score remains the same regardless of the judgment's status on your credit report. This is because the original judgment demonstrates you previously overlooked a debt -- crucial information that assists credit and loan companies when deciding whether to work with you.

Considerations

While a credit report judgment notes past irresponsibility, paying off the judgment demonstrates that you are compensating for your financial mistakes. Lenders will still take your low credit score into consideration, but paid debts reflect better upon you than unpaid ones. This is an important fact to consider since judgments often remain on credit reports longer than other entries.

The Fair Credit Reporting Act (FCRA) specifies reporting periods for each piece of information that could potentially appear on your credit record. While most derogatory items disappear after only seven years, a judgment can show up in a credit inquiry for much longer. Unlike other entries, states set the reporting period for judgments. Because a judgment could linger on your credit report for up to 20 years in some states, more future lenders have the opportunity to see and consider it. The sooner you pay it off, the more responsible you will appear and the more likely you are to obtain the goods and services you need.

Preventing Credit Damage

Paying off the judgment does not improve your credit score, but preventing the entry from ever appearing in your credit file prevents your score from dropping. Some states, such as New Jersey, provide debtors with a certain amount of time to pay the judgment before the court "dockets" it. Once the court dockets your judgment, the debt becomes public record and appears on your credit report. If your state grants you the option to avoid docketing through immediate payment, satisfying the debt quickly prevents it from ever showing up on your credit report and blighting your good credit score.

Improving Credit Scores

If the court already docketed the judgment or your state does not give you the option to prevent docketing through payment, you can offset the damage a judgment does to your credit by improving it other ways. You can help your credit score steadily increase by keeping your credit card balances low, paying your bills on time each month and disputing credit errors with the credit bureaus.