Does a Closed Judgment Affect Your Credit Card Approvals?
A credit judgment is the result of a creditor's lawsuit to force you to repay a delinquent debt. A judgment closes when you pay off the debt in question. The affect a judgment can have on your credit report depends largely on the overall health of your credit and the status of other open accounts. Paying off your judgment can improve your credit, but it won't erase the judgment on your credit report any sooner.
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Accessing Public Records
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A credit judgment is a matter of public record, which means anyone can view the information without your permission. This makes it easy for credit-reporting bureaus to discover a credit judgment entered against you and to adjust your credit score because of the action. Once credit bureaus begin reporting the judgment, it can remain on your credit report for up to seven years from the date the judgment was filed by the court. This is the case even if you settle the judgment before the seven-year period expires.
Affect of Judgment
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The affect a credit judgment has on your overall credit score varies by the strength of other notations on your credit report. According to Bills.com, a credit judgment may not cause significant damage to your credit score if you have a lengthy positive history of open accounts and the judgment is the sole black mark against your otherwise-healthy credit. If your credit report is rife with delinquent accounts, an open or closed credit judgment can significantly damage your credit report because it shows a widespread unwillingness to pay off your debts.
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Securing New Credit
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Opening up a new line of credit with an open or closed judgment still on your credit report may be difficult. If your credit is otherwise in good standing, you may be able to secure a new credit card or open a line of credit with a higher interest rate, or the bank may require you to secure the account with a down payment. If you have a longer history of delinquent accounts, creditors will stay away from offering you new accounts until you can repair your credit and pay off your current financial obligations.
Repairing Your Credit
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Fixing the damage to your credit from a credit judgment is not an overnight process. Paying off the judgment will require the creditor to enter a closed notation on your credit report indicating you no longer owe the creditor any money. This can help improve your credit and provide you with an explanation when prospective creditors ask about the judgment on your report. Even if you pay off the judgment, the notation will still remain for seven years. Monitoring your credit report can help you ensure that the credit-reporting bureau removes the notation on the first possible day.
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