Credit Report Sections

• Your credit report has four major sections. It contains your personal information such as name, address and current employer. It lists your positive credit information, which are the accounts you currently have open and pay on time. Your credit report also contains negative credit information, such as collection accounts and a separate section for public records. Creditor judgments appear in the public records section of your credit report.
  
  

Credit Score Impact

• Credit scoring companies such as Fair Isaac Corp., better known as FICO, have complex algorithms for calculating credit score. As a result, there is no consensus among credit experts as to exactly how much your credit score will decrease because of a judgment. Estimates range from 50 to 250 points. Having a satisfied judgment is better for your credit score than having an outstanding balance on a judgment, but both are negative items. Judgments, whether paid or not, will remain on your credit report for seven years after the date the court entered the judgment into public records.
  
  

Removing Judgments

• If the judgment debt belongs to you, it is difficult to remove it from your credit report. To do so, you would have to file an Order to Show Cause to request that the judge dismiss the original judgment. This may be a good option if the age of the judgment is older than your state's statute of limitations for debt collection. You can also request that the court vacate the judgment to have it removed from your credit report if the creditor did not properly serve you with the lawsuit paperwork or if the credit account does not belong to you; for example, if you were a victim of identity theft.
  
  

Avoiding Judgments

• Having a judgment on your credit report inflicts serious damage to your score, so make every effort to avoid them. When you receive your lawsuit paperwork, you should contact the creditor to work out a payment arrangement or settle the debt by paying off your balance. If you plan to pay off the balance, you can negotiate with the creditor to see if they will settle for less than the full balance owed. This prevents the case from going to court. If the case doesn't go to court, then no judgment appears on your credit report.