How Much Does a Judgment Hurt Your Credit Score?

Judgments may have a profoundly negative impact on your credit score, as they will not only lower it but will stay on your credit report for a number of years. Avoiding judgments is thus one of many ways to obtain good credit. There are a number of ways to remove or dispute credit scores on your credit report.

Judgments

A judgment is a decision made by a court regarding debts owed to a creditor. It is a way of legally enforcing a debt. After the debt has gone to a collection agency, you have 30 days to object to the judgment. The suing party must give you 30 days notice in order to comply with the Fair Debt Collection Practices Act.

Judgments and Credit Scores

Up to 35 percent of your credit score is affected by your payment history. Aspects that lower your credit score based on credit history may include late payments, liens, bankruptcies and collections as well as judgments. Credit scores are calculated differently depending on the credit rating agency. However, the bigger the judgment, the more the credit score will decrease. The statute of limitations on judgments varies by state, however they can last up to 20 years. Furthermore they may be renewed at anytime, and therefore may stay on your credit file for life. It is important to avoid judgments at all costs, as it may potentially impact your credit score negatively for a long time.

Removing Judgments by Settlement

A judgment may be removed from your credit report by means of settling the debt with the creditor. This is known as "dismiss via settlement." If the debt is valid and within the statute of limitations, then you may repay the debt in full or negotiate a percentage of repayment with the creditor. Any repayment terms with the creditor should ideally be put in writing, which should in turn be signed and dated with the judgment creditor. If your credit rating remains the same after settlement, this document may be used as proof. Your credit rating should change within 45 days.

Removing Judgments by Motion to Vacate

A "motion to vacate" is used when the debtor believes that any judgment is either filed in error. This may include debts that have never been incurred, or judgments that have been served in violation of the Fair Debt Collections Practices Act. A lawyer is usually needed when removing a judgment via motion to vacate. Not only will the judgment be removed from your credit report but you will not have to pay back any of the debt.