If you've received a judgment notice that you are being sued by a creditor, do not ignore it. If you do, the court will assume that you acknowledge the debt and agree with the amount owed. A judgment negatively affects your credit score and can remain on your credit report for seven years or even longer, depending on your state's statue of limitations.
Matter Of Public Record
The county clerk's office enters the judgment information into a public database. If the court participates in the Public Access to Court Electronic Records, or PACER, program, the credit reporting agencies can pull the information from public records to update your credit report. Representatives of the credit rating agencies also mine public records of courthouses that do not participate in PACER to update credit reports.
Credit Reporting
The judgment appears in the public records section of your credit report. Each credit rating agency has a different format for reporting negative items on your credit report. For example, Experian reports a judgment under a section entitled "Potentially Negative Items."
Statute Of Limitations
A judgment remains on your credit report for seven years. In some cases, the judgment can remain on your report longer if your state's statue of limitation exceeds seven years. According to the Fair Credit Reporting Act, which governs credit reporting, a judgment can stay on your credit report until the statue of limitations runs out. If your state's statue of limitations is less than seven years, the seven-year rule remains in effect.
Credit Impact
It is difficult to quantify the damage a judgment has on your credit report. The effect depends on your individual circumstance. A negative mark like a judgment has a greater effect the higher your credit score was before the judgment. A judgment affects you in other ways too. A creditor can attach the judgment to your home, giving it an interest in the property. You cannot sell your home until the judgment is resolved. You can improve your score by paying off the judgment. The date and amount paid will show on your credit report.
Consideration
You have an option to vacate a default judgment by contesting its merits in court. The court will overturn the judgment in favor of the creditor if you are successful. The county clerk's office removes the judgment from its public records. Contact the credit rating agencies to notify them of the vacated judgment. You can also contact the creditor to work out a payment agreement to avoid going to court, which negates the needs for a judgment.
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