Newly hitched couples often struggle with increased monthly expenditures. When bills stop being paid, the creditor maintains the right to go the courts and get a judgment against you. This judgment is the court’s way of declaring you in default on the judgment and giving the creditor legal methods of collecting the payment from you. You want to pay the judgment as soon as possible to avoid the risks of having one, even though it will not immediately improve your credit score.
Satisfying a Judgment
Many young couples assume that paying an adverse account on their credit report improves their credit score. Satisfying a judgment does not improve or affect your credit score. The adverse affect on your credit score comes from having a judgment or adverse account on your credit report in the first place.
Your Credit Report
Paying the judgment simply changes the amount due to $0 and notes that the account is paid in full. The actual judgment stays on your credit report for up to seven years. As time passes, the judgment’s impact on your credit score lessens. After seven years, the judgment falls off your credit report. If it doesn’t, you have the right to dispute the entry and demand removal. Some judgments may not appear on your credit report, though. Due to the National Consumer Assistance Plan, judgments will only appear on your credit report if they include your name, address and date of birth or Social Security number. Many judgments don't include your date of birth or Social Security number, so they may not show up on your report.
Risks of Non-Payment
Keeping this information in mind, it’s easy to come to the conclusion that if paying won’t help your credit score, then why bother to pay it. When a creditor gets a judgment against you, it has the right to garnish your paycheck to force you to pay the debt. It’s in your best interest to contact the creditor to work out payment arrangements before it forcibly takes your paycheck to satisfy the debt.
Despite the lack of effect on your credit score, there are benefits to paying a judgment. Not all credit decisions are totally based on your credit score. Mortgage lenders review your entire credit report to determine whether to grant credit. Open adverse accounts on your credit report hinder your ability to get a mortgage or other loan. All adverse accounts on your credit report need to be marked paid with a $0 balance before you get considered for mortgage loans.
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