Home > Credit Score > Credit Score Q&A: Satisfied Judgments and Credit Scores

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Matt from Annapolis had a challenging year back in 2007 that severely impacted his credit. At that time he was late on several of his credit cards, almost had his car repossessed and had a judgment placed on his credit report. While there are several circumstances that drove this behavior, Matt takes responsibility for his actions and has since been working hard to repair his credit. His score is not where he wants it to be, but he is tracking it over time and it is gradually increasing as his past delinquencies age and his new behaviors reflect low risk credit behavior.

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Matt wants to know if he should pay down (or completely pay off) the amount associated with the judgment to increase his credit score and to appear more creditworthy to lenders.

Paying down or paying off the amount associated with the judgment will have no impact on the credit score. While the judgment may now be reported as satisfied on his credit report, the fact that he even had a judgment in the past (satisfied or not) still negatively impacts his credit score. The data shows that consumers with derogatory information (such as a judgment) on their credit history have higher future credit risk compared to consumers with no previous derogatory patterns.

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Once the judgment is no longer reported (legally, it must be removed from the report after 7 years), it will no longer have any impact on the score. Matt may try and work with the lender to see if they will delete the judgment if he satisfies it in full (this is sometimes referred to as a “pay for delete” agreement), but there are no guarantees the lender will agree to that (and there is no requirement they do so).

Even though a satisfied judgment does not have a positive impact on score, a lender may consider it a good sign of willingness to pay and may override the score and grant the credit Matt may seek in the future.

[Related article: Credit Score Q&A: Length of Credit History vs. Late Payment History]

Image: walknboston, via Flickr.com

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  • http://@lavy02 Lavy

    Pay for delete masks the true credit history, potential future risk and portrays a risky customer as worthy.

    • Joseph

      Well in my case I have a judgment but for something that I lent someone my name and my credit to purchase. I know it was a mistake and now I am paying for it. So if the creditor offers me the pay for delete option, I am definitely taking it, despite what people like you might think.

      Obviously you’ve never been through a situation where so much crap happens in your life at the same time, and there are things that truly slip out of your hands. I’m sure you’ve never been in a situation where you’ve had to choose between paying your bills or feeding your family. If you’re so high and mighty that you’ve never had a late payment in your life, then good for you, and I truly hope that you never have to go through such a situation. Credit scores and credit reports serve the purpose that they were created for, but they don’t give the whole story of who you are as a person. The whole system is messed up anyway so if someone can play the system like this, then more power to them.

  • http://@lavy02 Lavy

    Joesph,

    There is always exception the rule, we were discussing the pattern and the ARM industry should not adopt this as a norm. My comment is applicable to FCRA and the spirit of it. Good luck

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