How Does a Lawsuit by a Debt Collector Affect Credit Scores?

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A lawsuit doesn't have any impact on a credit score, but a judgment can affect a credit score dramatically. Find out how to arrange an alternative payment plan with a debt collector with legal advice from a certified family mediator in this free video on laws and the court.

Part of the Video Series: Law & Court
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Video Transcript

You've just been to your mailbox and you've opened an envelope and you've found out that a debt collector has decided they're going to sue you on an overdue account. What are you going to do? Hello, I'm Robert Todd and I'm here to answer the question how does a lawsuit by a debt collector affect your credit score. Well the good news is a lawsuit in and of itself by a debt collector is not going to have any impact on your credit score. The bad news is a judgment from that lawsuit will have a very deleterious affect on your credit score. So the first thing you want to do is contact that debtor or the people that are acting on behalf of them or representing them to find out if you can either contest the amount they say is owed or arrive at an alternative payment plan. You don't want to ignore it and many times by ignoring something of this nature, the debt collector will not necessarily have your correct address but they will proceed with the last known address, get a legal proceeding going against you where they serve the last known address where you're not located, you never find out about this and one day you find out there's a judgment on your credit. So don't ignore this statement, contact them upfront, see what you can do to arrange an alternative payment plan. I'm Robert Todd and thank you for watching.

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