How Many Points on Your Credit Score Is Paying Off a Judgment Worth?

Leaving your debts unpaid will result in your creditor reporting your missed payments to the credit bureaus. Stop paying altogether and your creditor will give up trying to collect from you and sell the debt to a collection agency. Both missed payments and collection accounts hurt your credit score, but they aren't a creditor's only alternatives for damaging your creditworthiness. A creditor can also seek a civil judgment by filing a lawsuit against you. While paying off a judgment demonstrates to lenders that you took responsibility for your unpaid debts, it does not increase your credit scores.

Payment Effects

A judgment is an inherently negative item that can remain on your credit report for up to 20 years, depending on your state of residence. Because a judgment on your credit record has inherently negative connotations, paying it off does not lessen the negative impact it has on your credit scores. After you pay off the judgment, however, your creditor will update the judgment record to reflect your payment on your credit report.

Benefits of Payment

Although paying off a judgment doesn't boost your credit rating, it carries other financial benefits. For example, your creditor cannot garnish your wages, attach liens to your property or levy your bank account for a judgment you already paid. In addition, paying the debt lowers your overall debt liability, making you a better financial risk when applying for future loans.

Considerations

A financial record only impacts your credit score if it appears on your credit report. Once the judgment expires, the credit bureaus will delete it from your file and your credit score will improve. Many consumers mistakenly believe that paying off a negative credit entry will result in the credit bureaus deleting the entry. In reality, a negative entry on your credit report remains for the full federal reporting period. When removing collection accounts from a credit report, consumers sometimes pay the collection agency and, in return, the collection agency contacts the credit bureaus and removes the negative report from the debtor's credit record. This does not work with judgments. Judgments are reported to the credit bureaus by the court -- not the creditor. The creditor does not have the authority to remove the judgment on its own.

Improving Your Credit

While paying a judgment doesn't remove it from your credit report or net you additional credit points, you can still improve your credit rating. Paying your current creditors on time every month demonstrates to future lenders that you are reliable while simultaneously salvaging your credit scores. Maintaining low debts and a balance of both loans and credit cards also helps you build credit points -- even if your credit report is tarnished from a previous judgment.