Understanding How A Judgement Affects Your Credit

A civil judgment issued against you can wreak havoc on your credit for years to come. The three major credit bureaus not only present civic judgments on credit reports, but the arbiters of credit also ensure your failure to pay a creditor weighs heavily against you in the pursuit of loan or credit card. No other factor damages your credit score more than a civil judgment.

Civil Judgments Defined

Credit reports rarely include criminal information, but civil judgments, such as child support and alimony cases, appear often on the three most influential credit bureau reports. Civil judgments represent financial rulings against you that involve non-criminal charges. The results of civil judgments do not land on credit bureau files directly, but instead, a judgment on a credit report displays publicly in a court record. Credit bureaus review court records to obtain information that pertains to your credit history.

The Impact of Civil Judgment on Credit Report

The record of a civil judgment against you on your credit report typically causes more financial damage than the financial damage caused by a loan default of similar monetary value. When you apply for and receive a loan for a car or home, you voluntarily seek additional financial resources for the purchase of a high ticket product. On the other hand, a civil judgment indicates the consequence of you failing to fulfill a financial obligation, which the three major credit bureaus consider a significant financial flaw. In fact, a civil judgment against you appears much faster on your credit report than the time that it takes to for a credit report to include a loan default.

How Long Does Your Credit Suffer from a Judgment?

Like most hits to a credit report, a judgment can negatively influence a credit score for up to seven years. Although a judgment has more of a negative impact on your credit score than the negative impact of a credit card default, the maximum amount of time a judgment remains in your credit report is the same as any financial default. If you cannot remove a civil judgment from your credit report, you can expect to have a difficult time receiving a car loan, mortgage, or even a credit card at a ridiculously high interest rate. You can pay off a civil judgment before the end of seven years, but judgment still plays a significant factor in lowering your credit score.

The best advice for consumers faced with a civil judgment is to try to settle the case, before it ends up in the hands of litigators.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes