Pages

Judgments, Bankruptcies, Public Records and Credit Scores

Judgments, Bankruptcies, Public Records and Credit ScoresBad credit comes in a number of different flavors.  Late payments on a credit a card, collection accounts or a charged off medical debt can all fall under the heading of bad credit leading to a bad credit score.  While these accounts and trade lines are all contributing factors to bad credit, there are some items in your credit report that are more damaging than others.  The biggest contributors to poor credit and a low credit score are judgments, bankruptcies and other public records.

A public record is identified in as separate section of your credit report identified as simply Public Records. This section of your credit report identifies derogatory credit items that are a matter of public record through court filings and county records.  Common public records include bankruptcy filing information, tax liens and judgments.

Bankruptcy information entails the date and type of bankruptcy a consumer filed for as well as the disposition of the bankruptcy.  Tax liens that are reported on credit report can include any state, local or federal tax liens but generally involves state and federal unpaid income taxes that have become past due and the municipality has subsequently issued a lien against the tax payer’s property.  A judgment is the action resulting from an unfavorable court verdict against a consumer, ordering them to pay an outstanding debt.  Judgments on credit cards and other debts along with bankruptcy filings, tax liens and other records will be especially damaging to your credit score.

Many consumers are aware of the impact that bankruptcy can have on their credit profile and credit score, but many consumers are not aware that other public records and judgments can have a similar long lasting impact and adversely affect their credit score and credit report.  According to the credit score companies, credit score model research has found that a bankruptcy filing, a judgment, or any other public record is a good barometer for assessing future creditworthiness of an individual.

Judgments, bankruptcies and public records are strong indications of an unstable borrower and are a clear credit risk for lenders and potential creditors. Since these items are considered strong indicators of credit risk, the credit scoring models give a significant amount of weight to these items.  Unfortunately that weight leads to a much lower credit score.

Some public records can remain on your credit report for up to 10 years and therefore are some of the most damaging credit events in your credit report.  Fortunately, as with most all bad credit items in your credit report, adverse public records will have less impact on your credit score over time.

Needless to say, while the judgments, bankruptcies and public records are recorded in your credit report they can have a unfavorable effect on your chances of getting a new loan, new mortgage, rental unit or possibly even a new job.  This is why it is importance to check your credit report regularly to look for adverse credit situation that may get worse as well as any potential credit reporting errors.

If you do find a lien, judgment or other public record on your credit report that may be incorrect, you can dispute the credit report to have the information removed.  Any inaccurate or questionable negative information can legally be disputed and deleted from your credit report and this includes public records.  The Fair Credit Reporting Act gives consumers the right to challenge any negative information in their credit report including any judgments, liens, bankruptcy information or other public records. One option you have is to utilize the services of a reputable credit repair company.

No comments:

Post a Comment