A good credit score is essential if you want to have access to credit—such as credit cards, loans, and mortgages—now or in the future. A high credit score will also ensure that you get better interest rates and terms when taking out credit.
Credit reports contain information about past borrowing and payment behavior, and creditors use this information to evaluate creditworthiness. Judgments are a type of negative item that can appear on a credit report and impact your ability to borrow money.
Take the time to find the best credit repair company in Houston, Texas to help you calculate credit utilization and deal with any questions or issues related to your credit report. They can help if you want to know if you can get inquiries removed from your credit report or have judgments on your credit report currently.
What Is a Judgment on a Credit Report?
A judgment is a legal decision made by a court regarding a debt, in which the court orders the debtor to pay the debt to the creditor. The amount of the judgment may also include fees and interest in addition to the principal amount outstanding at the time of default. Creditors can use a judgment to collect outstanding payments from the person’s salary or directly from the bank account of the debtor.
A judgment may be issued after the lender or creditor takes legal action against a person who failed to repay the amount borrowed or owed. It is usually the last resort for creditors, because lawsuits can be expensive and time-consuming. Once a creditor files for a judgment, a court will hear arguments from both sides of the case and make a decision. If the debtor fails to appear in court, the judgment will be entered against them by default.
Ways to Get a Judgment Removed
Depending on the circumstances, it is possible to have a judgment removed from a credit report. Here are the ways to get this done:
Dispute Errors on the Credit Report
There are occasions when judgments appear on a credit report by mistake. It is a good idea to obtain a copy of your credit report and review it for any errors. If you believe there are any inaccuracies on your credit report, you can dispute them with the credit bureaus. The bureau may contact the creditor or court to verify the information. If the creditor or court is unable to verify the information, the judgment can be removed from the report.
Negotiate a Settlement With the Creditor
If the judgment is accurate, you can contact the creditor and negotiate a settlement. A settlement is an agreement between the debtor and the creditor to pay a lesser amount than the face value of the judgment, often in one lump sum. If this route is taken, it is important that it is done legally and that the settlement agreement is provided in writing by the creditor.
After paying the agreed-upon amount, the creditor will be required to file a satisfaction of judgment with the court. This must be sent to the credit bureaus so that the judgment can be removed from the report.
File for Bankruptcy
Often as a last resort, bankruptcy is a legal process that can be used by debtors to eradicate debt and provide a fresh start. In most cases, judgments will be discharged after bankruptcy. It is important to note, however, that bankruptcy can remain on a credit report for up to ten years.
To Summarize
A judgment on a credit report can negatively impact credit scores and make it difficult for a person to obtain loans or credit. It is important to review credit reports regularly and dispute any errors or inaccuracies and take steps to remove judgments in order to improve your credit rating. If a judgment is accurate, negotiating a settlement with the creditor or filing for bankruptcy may be the most realistic options available.