Do Satisfied Credit Judgements Need to Be Removed to Improve Your Credit Score?

Your credit score is determined using positive and negative items on your credit report. The more positive items and the fewer negative items you have, the higher your score will be. Having a judgment issued against you will cause your credit score to go down. However, paying off this debt after the judgment will raise your score, although it will not be raised to the point it was before the judgment was issued.

Credit Report

Credit reports contain information that credit reporting bureaus believe have bearing on your creditworthiness. If you have information added to the report that suggests you are not creditworthy, your score will go down. Any information that is not included on the report cannot affect your score. So, all negative information must be entirely removed from the report for it to cease counting against your score.

Unpaid Debts

An unpaid debt is one of the most negative pieces of information that you can have on your credit report. Having this on a credit report suggests to a potential creditor that you're not capable of paying back debts that you take out. If you have a credit judgment issued against you, then this too will appear on the report and have a similar effect on your score.

Satisfied Credit Jugdment

When you satisfy a credit judgment, this information will be reported to the credit reporting bureaus. Credit reporting bureaus look more favorably on satisfied credit judgments than outstanding ones. This is because these debts have been paid off. Although you may have been late in paying the debt, you are still more creditworthy than a person who has not yet satisfied a judgment.

Considerations

Satisfying a judgment and having this satisfaction listed on your credit report will raise your credit score past the point when the judgment was unsatisfied. However, the score will still be lower than it would have been had you never had the judgment issued against you in the first place. However, federal law requires that this negative item be removed from the report within seven years time, after which it can longer harm your score.