A court Judgement is a decision by the court that that requires you to pay your credit provider what you owe them plus any fees, charges, and interest you owe. It can remain on your credit report for five years from the date of Judgement. A Judgement on your credit report is an indication that you have high credit risk and shows that you were not able to repay your credit provider or come to an acceptable agreement without legal action. Court Judgements can have significant impact on your credit score, affecting on your ability to get other loans or a credit card or could result in you paying higher interest rates. If you have been taken to court by a creditor who says you owe money, you may end up with court Judgement against you. So, it’s important that you understand what a Judgement is and how to avoid them.
What is a Judgement?
A Judgement is a legal order issued by a court of law that makes a person or organisation liable for an amount of money. When you borrow money, you are legally required to repay the debt. This is any type of bills, including credit card debt, personal loans or even utility or mobile phone bills.
But what happens when you don’t pay a bill or repay a debt? The company, creditor or collection agency can legally pursue payment in a number of ways, one is to sue you in an attempt to recover the amount outstanding. If they are successful, the court issues a judgment against you.
The company or creditor who has a Judgement against you can add the following costs to the Judgement debt:
✓ Interest. This will be either at the rate under the previous contract or at the rate set by the court.
✓ Legal costs in getting the court Judgement. This amount may be limited by the court.
✓ Enforcement costs. These are the costs the creditor incurs in getting you to pay the debt.
To protect consumers, there is a specific process that must be followed. The defendant (that’s you) receives a Statement of Claim and then gets a 28-day period to either lodge an appeal or settle the matter with the Plaintiff (the creditor). This process does vary slightly from State to State, but for the most part the fundamentals are the same.
How does a Judgement affect my credit score?
Judgements will be listed on your credit report and negatively affect your credit score. A lender assessing your credit report will likely decide you have high credit risk, as it shows that you were not able to repay your credit provider or come to an acceptable agreement without legal action. Even one Judgement may make it difficult for you to get credit, even if some lenders may look past your credit score, and offer to approve you for credit, you can rest assured you will be very limited, you will not get the best deals, and are certain to face increased interest rates to cover the lenders risk. For this reason, it’s a good idea to avoid Judgements on your credit report.
How Long does a Judgement stay on my credit report?
Credit Reporting Agencies collect Judgement information from public records, and in most cases, a Judgement debt will remain on your credit report for 5 years from the date of Judgement. This is even if you repay your debt. However, once you’ve fully paid your debt Judgement, you can attempt to have it removed from your credit report. This is not easy to do, so it’s best to have an expert attempt to do it on your behalf.
Whilst the Judgement debt remains on your credit report for only 5 years, the limitations period under the (name of act) is twelve years. This means the creditor has up to twelve years to collect the Judgement debt from you. In addition, you may be liable to pay for their legal costs and any interest acquired over this period.
Will paying my debt remove the Judgement?
Sometimes. Once you’ve fully paid your debt Judgement, you can attempt to have it removed from your credit report. While some credit reporting agencies may remove a judgment if you provide evidence of from the creditor that it has been fully paid, others will not. Unless the Judgement on your report is incorrect, it is challenging to remove a judgment before its automatic removal period is up.
How can I remove a Judgement from my credit report?
You can wait the five (5) year period or you can attempt to have it removed from your credit report once it’s fully paid. While some credit reporting agencies may remove a judgment if you provide evidence from the creditor that it has been fully paid, others will not. Unless the Judgement on your report is incorrect, it is challenging to remove a judgment before its automatic removal period is up.
However, the judgment is considered incorrect and thus removed if:
✓ whoever obtained the Judgement (the creditor) agrees to set it aside; or
✓ a court sets aside a Judgement.
With over 8000 pages of legislation, over 200 compliance points that need to be checked, and over ten (10) years of experience in the industry, Fix Bad Credit are experts and very proficient in Judgement removal.
How many points will my credit score increase by once the Judgement is removed?
This is a very common question, and unfortunately there is no exact answer.
Your credit report is based on information available from lenders (such as banks, credit unions and payday lenders), as well as any public record information (for example, any court Judgements) available at the time. It may also include information from telecommunication and utility providers about any defaults or credit advances. The algorithm used to calculate your credit score typically considers such details as:
✓ The credit or loan products you have held in the past, including the credit provider, the type of product, the opening and closing dates of the account and your credit limit details of the applications you’ve made for credit or a loan, including the number of applications, as well as the type and size of the credit or loan you requested.
✓ Your repayment history, other overdue accounts, and defaults.
✓ Information about any court judgements, bankruptcy or personal insolvency.
These factors are taken into account when calculating your credit score. For example, if you applied to multiple credit providers in a short space of time, this may signal that you are in credit stress and may negatively impact your credit score. According to reporting body Equifax, this flags you as a greater risk than someone who has made infrequent applications for credit with only a few credit providers.
See How My Credit Score is Calculated to get a better understanding.