A court awards a civil judgment to the plaintiff in a debt collection lawsuit if the plaintiff sufficiently proves its case or if the defendant does not file a response to the lawsuit and does not appear in court. Because the credit bureaus regularly peruse court records, a civil judgment against you will appear on your credit report. The judgment serves as a record of unpaid debt and will lower your credit score.
Although all civil judgments are derogatory, the degree to which a judgment will damage your credit rating depends entirely upon the other information the credit bureaus have on file for you. In general, a judgment hurts you the worst if your credit report contains numerous other derogatory entries, such as credit card charge-offs and collection accounts.
A judgment only impacts your credit score for the amount of time it remains a part of your credit profile. Once the credit bureaus remove the judgment from your credit report, it will no longer factor into your credit score. According to the Fair Credit Reporting Act, the length of time the judgment can remain on your report depends upon your state’s judgment enforcement period. If your state grants the creditor less than seven years to collect the judgment, it will remain on your credit report for seven years. If state laws grant your creditor more than seven years to collect, however, the judgment will remain within your credit history for the duration of the enforcement period.
While paying off your judgment is admirable, it does little to improve the damage having a judgment on file does to your credit rating. Lenders who pull your report will consider the fact that you met your obligations a positive factor, but the act of paying off the debt does not directly influence your credit scores. The judgment will continue to appear on your credit report until the reporting period expires--whether you pay it or not.
One exception to this rule exists: In states that only record unpaid judgments, paying off a judgment before the court enters it into the public record prevents the court from officially recording the ruling. In turn, this prevents the judgment from ever appearing on your credit report.
Removing a Judgment
You have the right to contest a judgment that you believe was filed against you in error by filing a motion with the court that awarded the judgment requesting that it vacate the ruling. The court will then schedule a second hearing during which you must present your case. You can also contest a judgment’s appearance on your credit report with the credit bureaus if you believe that judgment belongs to someone else and appears on your credit profile in error. The credit bureaus are required by law to investigate disputes and, if the court cannot verify the judgment as yours, the credit bureaus must remove it from your credit file.
- Bills: Will a Civil Judgment Affect My Credit?
- Federal Trade Commission: The Fair Credit Reporting Act (Section 605/p.22-23)
- Neighborhood Economic Development Advocacy Project: Vacating a Default Judgment
- Consumer Financial Protection Bureau. "What Is a Judgment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Statue of Limitations On a Debt?" Accessed March 16, 2020.
- Texas Law Help. "What Is an Affirmative Defense?" Accessed March 16, 2020.
- Federal Trade Commission. "Time-Barred Debts." Accessed March 16, 2020.
- The Florida Bar. "The Life of a Money Judgment in Florida Is Limited for Only Some Purposes." Accessed March 16, 2020.
- Virginia Law. "§ 8.01-251 Limitations on Enforcement of Judgments." Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "How Long Does Negative Information Remain on My Credit Report?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Garnishment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "Can a Debt Collector Take My Social Security or VA Benefits?" Accessed March 16, 2020.
- County of Napa. "Real Property Levy - Writ of Execution." Accessed March 16, 2020.
- U.S. Marshals Service. "Service of Process: Writ of Execution." Accessed March 16, 2020.
- National Association of REALTORS®. "What Is a Property Lien? An Unpaid Debt That Could Trip Up Your Home Sale." Accessed March 16, 2020.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.