How Do The Credit Bureaus Treat Paid & Unpaid Judgments?
There is good news about the way the credit bureaus treat paid judgments. In many cases this represents a credit repair opportunity; in your case, it will result in the imminent removal of the judgment from your report. Once a judgment is paid the bureaus will cease reporting seven years after the original filing date. If the original filing date on your judgment was over six years ago, it will fall off your report soon.
Unpaid judgments, on the other hand, can literally linger forever. From a credit repair perspective, unpaid judgments must be dealt with in a different manner from the collections that appear in the body of your report, many of which may be bogus and can simply be disputed and removed. Per the Fair Credit Reporting Act, an unpaid judgment will report for 7 years from the filing date or the state statute of limitation (SOL), whichever is greater. If you look at your state SOL for judgments you will see that it is 20 years. And to make things worse, judgments can be renewed.
Please note that the SOL for judgments is not the same as the state SOL for debt. Once a defaulted debt has made it through the court system and has become a judgment it is in a new category, and these will appear in the public records section of your credit report. If you review the public records section of your report and find any unpaid collections that are beyond seven years from the filing date you have a credit repair opportunity. As soon as you pay them, they will no longer appear on your report.
We normally suggest to our credit repair clients that it is worth attempting to have our law firm negotiate these older judgments, rather than just paying them. We may need to contact the plaintiff. They may be receptive. Something is better than nothing, and if the judgment has been sitting there for long enough the plaintiff may be thrilled to get anything! If the dollar amount is significant, you may rely on the fact that the process of payment and recording will be handled properly.