Judgment on Credit Report
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How Will a Judgment Affect My Credit Report?
What is a Judgment?
Judgments usually mark the end of a debt lawsuit in favor of either you or a creditor. Judgments are public records and may appear when potential creditors, employers, or others decide to investigate your credit. It’s relatively rare for one to be fully removed from the public record, and in Texas creditors can use the courts to pursue you for the judgment balance for 10 to 20 years. For more information about judgments, why they happen, and what they can lead to please see our article about locating judgments against you in Texas.
Do Judgments Appear on Your Credit Reports?
The answer to this question is more complicated than you may expect. Prior to 2017 judgments frequently appeared on credit reports, usually near the beginning of the report in the “Public Records” section. However, as part of a settlement agreement for several class-action lawsuits, the three credit bureaus (TransUnion, Experian, and Equifax) all agreed to stop displaying judgments on their reports until at least January 1st, 2020.
As of the date of this article’s publication, it is unknown whether the credit bureaus intend to resume reporting judgments. Currently it does not appear as though the practice has been widely resumed, but this may change. We will continue to monitor this trend and update this article as new information becomes available. For now though, if you think there may be a judgment against you, you should check your credit report just to be sure, then check your local courts.
How Did Judgments Affect Credit Reports?
Since there is a possibility the bureaus will begin reporting judgments again, you should consider how they were reported prior to 2017 with the understanding that this may or may not become the norm again. Federal law allows for judgments to reported on credit reports for either seven years or the duration during which the judgment can be collected, whichever is longer. Due to the difficulty in complying with this rule with all the differences between states, most judgments were just removed from credit reports after seven years.
Not only did judgments appear at the top of credit reports, clearly visible to anyone checking your credit, they also impacted credit scores. The exact impact varied depending heavily on the individual, but it was usually not enough (on its own) to move individuals from one rating category to another. Credit reports also showed whether you had paid the judgment off or whether it was still outstanding, with outstanding judgments damaging your credit more than satisfied ones.
It is important to note that whether a judgment does or does not appear on your credit reports, it does remain a public record. Banks and other creditors will still usually be able to see it if they are looking into your credit as part of an application for a mortgage, car loan, or other significant line of credit. Outstanding judgments
Where Can I Find My Credit Report?
Any discussion of credit reports should include a way to see yours. The best way to do so is through the following link:
Just click the red button, “Request your free credit reports” and follow the instructions. “Annual Credit Report” is a service provided by the three credit bureaus. It is the most secure and direct way to access your credit reports, but you only receive one free credit report from each of the three credit bureaus per year, so you may not want to pull all three at once.
Credit Karma is a less direct source of credit information but may be useful (especially if you’ve already used all three of your free credit reports for the year). The service is free and combines its information directly from two of the three credit bureaus. This can be a mixed blessing in terms of accuracy, and if you see incorrect information on Credit Karma, you’ll still need to contact the bureaus directly to fix it. It’s generally best to get your reports directly from the bureaus, when possible.
What Can I Do About A Judgment?
A creditor may have up to 20 years in Texas to come after you and collect on a judgment, and even after that time the judgment doesn’t disappear from the public record. You generally have two options to clear up a judgment and ensure it doesn’t interfere with your financial plans.
Vacate the Judgement
To remove a judgement from the public record you need to get it vacated by the court. This can be extremely difficult in all but the best of circumstances. If the case was in Justice Court and you never filed an answer (resulting in a default judgment), you may have a two-week window after the judgment to file a motion for new trial, which you’ll still need to win or dismiss to avoid the judgment. Aside from that exception, attempts to vacate judgments are difficult and rarely successful. You are generally better off pursuing a release, described below.
Obtain a Release
Typically, your best option will be to obtain a release of the judgment. This shows that the creditor has agreed to no longer hold you liable for the debt in question, filing a document with the court showing that the debt has been satisfied. This won’t remove the judgment from the public record, but it will show it as paid off (which looks much better to potential creditors). As you may expect, creditors will take some convincing to release a judgment, usually in the form of a settlement offer that you’ll have to negotiate. This is often the best reason to hire an attorney to assist with a judgment; you have an uphill battle to settle once a court has sided with your creditor in the form of a judgment.
In the most difficult of circumstances, it may not even be clear who currently “owns” the judgment and has the authority to release it. This is especially true of older judgments that were granted to companies that have since restructured or gone out of business; your judgment won’t just disappear because the company that sued you did.
This is where the expert knowledge of a debt defense attorney like those on our team here at Weston Legal can prove invaluable. We know how to track down judgment creditors and will negotiate with them on your behalf. It is possible to handle a judgment on your own, but you can generally expect a better outcome when you turn to an experienced team of professionals like ours. If there has been a judgment filed against you and you’re worried about it remaining visibly outstanding to creditors or employers, give us a call and we’ll explain how we can help in your specific situation.
Locating the Judgment Creditor
The first step is often to locate which entity owns the judgment. This can be a difficult task given that many debt buyers have gone out of business recently. We have experience tracking down judgment creditors so if you have this problem give us a call.
Getting a Release of the Judgment
The ultimate goal in resolving any judgment is to get a release. This means that the creditor is releasing you from any and all liability. To get a release the creditor typically must agree to whatever amount you are paying them to resolve the judgment. As a result, many judgment creditors are difficult to deal with. However, if you have a lump sum payment available, the creditor may be willing to take the payment in exchange for a release.
Getting a Partial Release of the Judgment
If you own a home, then getting a partial release of the judgment may be all that is necessary to obtain clear title of your property. For more information on this please see Partial Release of Judgment.