By MIKE GOLDSTEIN
Public record information, such as bankruptcies and tax liens, can often be seriously damaging to credit health, so it's rarely a welcome sight on anyone's report.
Included in the public records category is a group of derogatory marks classified broadly as "judgments." Here, we'll explore civil judgments and their effect on your credit health.
What are civil judgments?
Criminal record information isn't typically included on your credit report, but civil judgments - like the results of a civil lawsuit or a child support case - are often included. Put simply, a civil judgment is a ruling against you in a court of law pertaining to non-criminal matters, often requiring the payment of damages (for instance, if you lost a case or if you failed to respond to a lawsuit at all).
These marks on your credit are not generally reported to credit bureaus directly. Instead, civil judgments are documented in publically available court records, which credit bureaus may review and include on your credit report.
Other than possibly appearing on your credit report, civil judgments may also result in wage garnishment (a legal order to have payments automatically deducted from your paychecks), eviction or a real estate attachment (an order that forces the sale of property in order to repay debts), among other measures.
Why do civil judgments appear on my credit report?
Your credit report is intended to be an account of your outstanding debts and your borrowing history. Civil judgments often result in a debt that lenders and other parties who are legally permitted to review your credit report use to get a more complete understanding of your financial situation.
How could civil judgments affect my credit score?
The inclusion of civil judgment information in a credit file will often cause a more noticeable drop in score than that of a similarly sized loan, for instance. Taking out a new loan signals that a consumer has voluntarily sought out credit and willingly agreed to pay that money back over time.
On the other hand, a judgment is likely perceived as a consequence of prior mistakes, rather than being indicative of financial management. At best, a judgment will be viewed as another obligation that could keep a potential borrower from repaying other items on their credit report, such as credit cards and loans.
Due to this distinction, civil judgments, like other reported public records, are generally considered to be harmful to credit scores and often have an immediate effect at the time of their addition.
How can I get these off my report?
In most cases, removing a civil judgment from your credit report is not a possibility. Most judgments will remain on your credit report for seven years from the filing date, and this timeframe will apply whether you pay off your damages or not. Paying off a civil judgment on time will likely still be beneficial to your credit health, though. If you do so, the status of the judgment on your credit report could be updated to reflect that it's been satisfied. If you leave a judgment unpaid, though, it could potentially be refiled toward the end of the seven-year limit, renewing the negative mark for another seven years.
As is the case with any incorrect information on your report, misplaced or mischaracterized judgments can be disputed directly with the credit bureaus.
Civil judgments affect your ability to maintain a healthy credit profile. Understanding the origins of these derogatory marks and grasping their implications are important steps in regaining your financial balance.
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