What Is a Judgement on a Credit Report?

A civil judgment on a credit report can significantly influence an individual’s financial standing and future borrowing opportunities. This article clarifies what a civil judgment entails within the context of personal finance and credit.

Understanding a Civil Judgment

A civil judgment represents a formal court order, typically issued at the conclusion of a lawsuit. This legal directive compels one party, known as the debtor, to remit a specified sum of money to another party, the creditor. It transforms an ordinary debt, such as an unpaid bill or a breach of contract, into a legally enforceable obligation.

Common scenarios leading to a civil judgment include delinquent credit card accounts, unpaid medical bills, or a failure to uphold contractual agreements. Once a judgment is entered, the creditor gains legal tools to pursue collection, which may involve wage garnishment, levying bank accounts, or placing a lien on property. The judgment outlines the responsibilities and rights for both the debtor and the creditor, signifying a definitive determination that a debt is owed and must be satisfied.

How Judgments Appear on Your Credit Report

Historically, civil judgments were commonly found in the “public records” section of a consumer’s credit report, impacting their credit score. Credit bureaus obtained this information from public court filings, including details such as the court name, case number, and the judgment amount, which meant a judgment would prominently appear to potential lenders.

However, a significant change occurred in July 2017, when the three major nationwide consumer reporting agencies—Equifax, Experian, and TransUnion—stopped including most civil judgments on credit reports. This shift resulted from the National Consumer Assistance Plan (NCAP), an agreement aimed at enhancing credit reporting accuracy. The NCAP introduced stricter criteria for public records, requiring a Social Security Number or date of birth for matching, which most civil judgment records lacked.

While civil judgments no longer typically appear on credit reports from these major bureaus, they remain public records. This means that lenders or other entities can still discover them through direct searches of court records. The absence of civil judgments on credit reports does not erase the legal obligation to pay the debt. The underlying financial behaviors leading to a judgment, such as missed payments or accounts sent to collections, will still be reported and can negatively affect credit scores.

The Reporting Duration of Judgments

The Fair Credit Reporting Act (FCRA) generally permits civil suits and judgments to remain on a consumer’s credit report for up to seven years from the date of entry, establishing the maximum reporting period. This duration applies unless a governing statute of limitations for the debt itself is longer.

Despite the FCRA’s allowance, the 2017 National Consumer Assistance Plan effectively removed civil judgments from the credit reports maintained by the major credit bureaus, meaning they generally do not appear at all. Bankruptcies are an exception, as they continue to be reported as public records on credit reports for up to 10 years, depending on the chapter filed.

While the federal law allows for a seven-year reporting period, the current industry practice by the primary credit reporting agencies means civil judgments are generally not found on these reports. However, the legal obligation to satisfy the judgment persists and may be enforceable for a longer period depending on state laws.