It used to be that monetary judgments were reported by credit reporting agencies (CRAs). As such, unpaid judgments could significantly damage a person’s credit score, thereby making it more difficult to get a mortgage, car loan, etc. That is no longer the case since CRAs do not report most judgments. But judgments and judgment collection are still a matter of public record.
Judgments appearing on credit reports could be leveraged as a motivating factor to encourage judgment debtors to pay. But with credit reports no longer in play, creditors need to look to other means to encourage payment. Those other means are topics for other posts. For the remainder of this post, we are going to discuss how we got to where we are today with CRAs.
Listed in the Public Records Section
It was common for the big three CRAs – Experian, TransUnion, and Equifax – to report monetary judgments in the ‘Public Records’ section of their credit reports. This section usually appeared near the top. There were both advantages and disadvantages to the practice.
A big concern was the fact that anyone who pulled a consumer’s credit report could see both outstanding and settled judgments. Imagine a landlord who pulled a credit report on a rental applicant. Seeing a past judgment could influence the landlord’s decision, even if that judgment were totally unrelated to the applicant’s income or financial status.
That was the downside to listing judgments on credit reports. The upside is that it gave creditors yet another factor to consider when examining an applicant’s creditworthiness. But that information is no longer available.
A 2017 Lawsuit and Subsequent Settlement
The big three CRAs didn’t have a good year in 2017. They were subjected to a series of civil lawsuits alleging all sorts of wrongdoing. One of them was a suit filed by nearly three-dozen state attorneys general with respect to how CRAs collected and reported information.
Without getting into the details, one of the results of that suit was a settlement through which the three CRAs agreed to stop reporting judgments until at least 2020. All three volunteered to extend the ban beyond that year. Even though they can now begin reporting judgments again, they have voluntarily decided not to do so.
Original Debts Are Still Reported
Although judgments themselves are no longer included on credit reports, the original debts associated with some types of judgments are still fair game. A good example is medical debt. While a civil judgment related to medical debt will not be reported, the outstanding itself will remain on a person’s credit report until paid.
Reporting original debts allows judgment creditors at least some leverage to encourage debtors to pay. The more quickly a debt is taken care of, the more quickly it comes off a person’s credit report.
Still a Matter of Public Record
The other thing to remember is that judgments are still a matter of public record. This is because judgments are actually court decisions. They are decisions rendered by judges in civil cases. That means they will remain a matter of public record forever, unless a court orders otherwise.
Creditors concerned about the existence of an unsatisfied judgment can always scour public records at the county courthouse. Most records are online these days, so searching them for unpaid judgments isn’t terribly difficult. It can be time consuming, though.
Thanks to a 2017 lawsuit by multiple state attorneys general, judgments no longer appear on credit reports. Original debts do. Meanwhile, judgments remain a matter of public record. Now you know all the details of how we got to where we are today.