If you have judgments on your credit report, you might be wondering how to remove them, if you can remove them, and how they will affect your credit card score.
In this three-part blog, I am going to discuss:
- The facts about judgments (Part I: Judgments on Your Credit Report)
- How to avoid judgments (Part II: Judgments on Your Credit Report)
- What to do if you have a judgment on your credit report, and how to limit the negative affects they have on your credit score (Part III: Judgments on Your Credit Report)
In this week’s blog, we’ll take a look at the ABC’s of judgments.
A judgment is a court order that demands a debtor pay a debt. If a debtor cannot or will not pay the debt, the court might attach a judgment to a piece of property. These judgments are reported to the credit bureaus, have a negative impact on your credit score, cost you the original debt (plus interest and court fees), are part of your public record, and can lead to liens and property loss.
Any bill that you are taken to court for can result in a judgment lien on your property. This means that you are unable to sell the property until you satisfy the judgment. In worst-case-scenarios, you will be forced to sell the property to satisfy the judgment.
In any case, interest will accrue until the debt is paid in full.
So how do judgments works? Let’s say you stop paying your credit card bill. About ninety days later, the bill will be turned over to a collection company, who will attempt to collect the debt. If the collection company fails to collect the debt, the credit card company can decide to sue you. If the courts decide that you are at fault, the courts will issue a judgment against you, stating that you are responsible for paying the debt plus interest.
The statute of limitations determines how long the creditor has to sue you. This is decided on a state-by-state case. Most states have statutes of limitations that are at least ten years. Usually, there is no “waiting it out.” Most states can renew a claim against you, meaning they can come after you for years and years for failure to pay a debt.
Obviously, judgments are not your friend! Come back next week to learn how to stop a judgment in Part II: Judgments on Your Credit Report.
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A “credit card score” is a letter grade that reflects whether your credit card habits are helping you build credit or causing you to have bad credit: An “A” credit card score is excellent; an “F” indicates that you likely have bad credit. The lower your credit card score, the more likely you have bad credit and need to make immediate changes to your credit card behavior.