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How judgments affect your credit score

Any new negative claim against your credit is going to hurt your credit score. Those are the simple facts. Judgments are considered a bit more severe than late payments and collection accounts; they are viewed more similarly to a bankruptcy or foreclosure. This means you can count on a hit of somewhere between 120 to 200 points. It’s not pretty so if there is any possibility or opportunity to avoid a judgment you’ll definitely want to take them up on their offer.

Any new negative claim against your credit is going to hurt your credit score. Those are the simple facts. Judgments are considered a bit more severe than late payments and collection accounts; they are viewed more similarly to a bankruptcy or foreclosure. This means you can count on a hit of somewhere between 120 to 200 points. It’s not pretty so if there is any possibility or opportunity to avoid a judgment you’ll definitely want to take them up on their offer.

A judgment is when an individual or a creditor presents a case against you to a judge and proves that you owe them money. Typically a judgment is put against you for larger amounts of money than a collection account. Collection accounts are considered more lenient in their repayment standards and often are negotiable somewhere down the road. Judgments are much harder to avoid paying and much less forgiving in their negotiations.

Fortunately all of the same rules apply to judgments as the rest of your credit report. You can count on the impact a judgment has on your score to decrease incrementally as time passes. Also, whether they are eventually paid off or left unpaid, they must only show up on your report for seven years and then be wiped clean afterwards.

While no one wants negative items on their credit report because they damage your credit score there are also other less tangible affects to your score. Even if you are able to restore a good credit score, lenders may still decline to do business with you for the very appearance of a judgment on your report. In general a judgment will prevent you from being able to qualify for a home loan, at least in this lending environment. Your best bet to working around this is to submit a formal letter of explanation to help them understand why you have or had a judgment against you and to show them you have learned from your mistake.

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Friday, 27 January 2023
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