Do civil judgements affect credit score?
Civil judgements can have a significant impact on an individual’s credit score. Credit scores are used by lenders to assess the creditworthiness of borrowers, and a civil judgement can negatively affect this score. In this article, we will explore how civil judgements can impact credit scores and what steps individuals can take to mitigate their effects.
Understanding Civil Judgements
A civil judgement is a legal decision made by a court that orders a person or entity to pay a certain amount of money to another party. This can occur in various situations, such as a breach of contract, unpaid debts, or other civil disputes. When a civil judgement is entered against an individual, it becomes a matter of public record and can be accessed by potential lenders.
Impact on Credit Score
A civil judgement can have several negative effects on an individual’s credit score. Firstly, it will be reported to the major credit bureaus, such as Equifax, Experian, and TransUnion. This will immediately lower the credit score, as civil judgements are considered a form of derogatory information.
Secondly, the presence of a civil judgement on a credit report can make it more difficult for individuals to obtain new lines of credit, such as credit cards, loans, or mortgages. Lenders may view the civil judgement as a sign of financial instability and be hesitant to extend credit.
Thirdly, the civil judgement can remain on an individual’s credit report for up to seven years from the date it was filed. During this time, the credit score may continue to suffer, making it challenging for individuals to rebuild their creditworthiness.
Steps to Mitigate the Effects
While civil judgements can have a lasting impact on credit scores, there are steps individuals can take to mitigate their effects:
1. Pay off the debt: If possible, paying off the debt associated with the civil judgement can help improve the credit score. This demonstrates to lenders that the individual is taking responsibility for their financial obligations.
2. Monitor credit reports: Regularly reviewing credit reports can help individuals identify any errors or inaccuracies that may be affecting their credit score. If any issues are found, they can be disputed with the credit bureaus.
3. Pay all bills on time: Consistently paying all bills on time can help improve the credit score over time. This demonstrates to lenders that the individual is responsible and reliable.
4. Consider credit repair services: If the civil judgement is significantly impacting the credit score, individuals may want to consider hiring a credit repair service. These services can help identify and remove errors from credit reports and provide guidance on rebuilding credit.
Conclusion
In conclusion, civil judgements can indeed affect credit scores. While they can be challenging to overcome, individuals can take steps to mitigate their effects and work towards rebuilding their creditworthiness. By understanding the impact of civil judgements and taking proactive measures, individuals can improve their financial standing and secure better opportunities for the future.
