Judgments are formal court decisions following a lawsuit, typically from a creditor, company or individual due to non-payment of debts owed.

How to prevent a judgment

The easiest way to avoid a judgment is to pay at least the minimum payment on all your debts, on time, every month. Sometimes a financial hardship will prevent you from making payments; when this is the case, contact your lenders right away. They may be willing to work out payment arrangements for missed or late payments to help prevent you from falling behind on your loans.

If you establish a payment plan but know you may miss the scheduled payment, be sure to contact the lender ahead of time. By being proactive and showing concern to meet your obligations, the lender may work with you to help you get through the hard times.

Judgments and your credit score

A judgment shown on your credit report can bring down your credit score, and potential creditors may hesitate to loan you money. If you do get approved for a loan, chances are the interest rate will be higher than normal to compensate for the additional risk the lender is taking.

How long does a judgment stay on your credit report?

A judgment can remain on your credit report for seven years from the date it was originally filed. When you pay the judgment, your credit report will show the judgment was satisfied. It can, however, still remain on your credit report the entire seven-year period – this is still better than an unsatisfied judgment.