A judgment is a very serious matter that should not be ignored. It has wide-ranging effects, not just on your everyday life, but on your credit report, as well. It may bar you from being approved for a loan, and it can make many creditors wary of doing business with you, depending on the nature of the judgment.
Though it is rare, some judgments are falsely listed on a credit report. In cases like these, the best credit repair company in Houston, or elsewhere, can help get these erroneous items removed. Before we get to that, however, let’s talk about judgments and their effect on your credit report.
What Are Judgements?
A judgment is a court order against a person as a result of a lawsuit. A judgment can be for any number of reasons, but the person that lost the court case must pay for whatever misdeeds, whether they are actual or perceived.
In 2018, credit reporting bureaus made a change to the way they list judgments, so that most judgments no longer appear on credit reports. In some cases, judgments may still be listed, however, so it’s always best to obtain a copy of your credit report to be sure.
If a judgment is listed, those accessing your credit report will be able to see who the creditor is, the date, and the amount owed. The judgment will remain on the credit report until it has been satisfied. Once it has been satisfied, it will continue to be listed as paid and settled.
Common reasons for judgments include unpaid taxes, past-due child support, and disputes with creditors that have not been paid. Medical bills can also affect your credit in Texas, and these bills can become judgments if the creditor decides to sue you.
Lastly, if you do not pay the judgment or agree to a payment schedule and satisfy it, the court can take the further step of garnishing your wages. This means that your employer is legally obligated to deduct a portion of your pay each pay period until the judgment is satisfied.
Because this amount is being deducted from your pay, it may hinder your ability to get a loan when a bank calculates your ability to repay a loan based on your income. They may decide that you cannot afford the loan, after factoring in how much of your income is going towards paying off the judgment.
Other Things That Impact Your Credit
Besides the typical items like credit cards, auto loans, and collections, there are several other non-traditional items that may appear on a credit report in a negative light:
Bankruptcy
Filing bankruptcy is obviously going to be listed on a credit report, as it is the final step of one’s inability to pay their creditors. The one upside of bankruptcy is that all items on the credit report you weren’t able to pay as part of the bankruptcy will be listed as discharged.
Foreclosures
Having to turn the keys to your house over to the bank is another huge issue that appears on many credit reports. Because the process can take months and must wind its way through the court system, it usually gets listed as an entirely separate item on your credit report, much like bankruptcy or judgments.
Surrendering Your Car
Similarly to a foreclosure, surrendering your car will be listed on your credit report and can have a negative impact.
Fixing Inaccuracies
It could be that you have a judgment erroneously listed on your credit report, either a mistake that belongs to someone else or a judgment you satisfied that’s still listed as active. Whatever the reason, successful and licensed credit repair companies like The Phenix Group can help to get these inaccuracies removed by communicating with the credit bureaus, courts, and creditors to set the record straight!