How to Remove a Judgement from Your Credit Report

What is a judgment?
If you owe money to somebody, they can take you to court to collect the debt. Both private individuals and big companies can file in court to collect a debt, so it's not just your credit cards that you have to worry about. If you hire a landscaper and then fail to pay them, even if you feel the landscaper has done a poor job, the landscaper can take you to court for payment. If you fail to appear in court, a default judgment is entered against you. Don't miss this court date - it's worth arguing a collections attempt to avoid a judgment on your credit report. If you don't have a valid argument, attempt to settle the debt. Do what you can to avoid a judgment, because it can be very difficult to remove once it is issued.

Once a judgment is entered on your credit report, it can stay on your report for anywhere from 12-20 years. Obviously, the best thing to do is avoid getting a judgment in the first place. It's much easier to avoid a judgment than to remove a judgment from your credit report, so if you have the option to negotiate a collection case that's pending litigation, do it. If it's too late to avoid the judgment, there are a few different things you can try to eradicate a judgment from your credit report.

Check your statute of limitations.
One very easy way to dispute a judgment is to check your state's statute of limitations. The statute of limitations for collections varies tremendously from state to state, running anywhere from 3-15 years depending on your location. If the case was filed outside of the statute of limitations, your judgment can be dismissed because it was too late for the company to pursue a debt collection attempt. Unfortunately, if the judgment is entered against you, the statute of limitations becomes 12 or 20 years, and businesses can re-file before the statute runs out to extend the statute indefinitely. Under this worse-case-scenario, if you fail to deal with it, the judgment could literally follow you around for the rest of your life.

Motion to vacate judgment.
Under certain circumstances, you can file a motion to vacate judgment. If you are not properly served in a collection case, you can move to vacate a judgment on the grounds of incorrect service. If you are not properly served 30 days before your court hearing, a default judgment against you may not be valid. If a judge agrees to vacate your judgment, you can then send the paperwork to the collections agency to dispute your judgment and delete it from your credit report. If the person who filed suit fails to appear at a court hearing for a motion to vacate judgment, you'll win your case by default.

Pay the judgment.
If you can't avoid having a judgment entered against you and a motion to vacate isn't appropriate, the best option to minimize damage to your credit report is to pay the judgment. Once you pay a judgment, contact the credit bureaus to have the information updated to reflect: "judgment satisfied." If you have to use this option, add a statement to your credit report to explain the circumstances of the judgment. If you've got a good reason to have missed a payment or failed to pay an account that becomes the subject of a judgment, lenders may be willing to overlook a satisfied judgment. If you have an outstanding judgment, you may not be able to buy a home or refinance until the judgment is listed as satisfied. Many mortgage companies don't want to work with a borrower who has a judgment outstanding, as a lien could be placed against the property. Banks don't want to have to fight other creditors for money in the event that a mortgage isn't paid, so some banks won't issue a loan when a lien could be placed against the property. A judgment won't drop off your credit report when you pay it, so don't expect a payment to make the judgment go away. A payment simply changes the way the judgment is reported, to reflect that it has been paid and is no longer outstanding.

If the judgment is inaccurate, dispute it.
If a judgment is inaccurately entered on your credit report, with an incorrect date, party information, balance information or not listed as satisfied, dispute it. If the credit bureau cannot verify your judgment information within 30 days, the bureau may remove it entirely from your credit report. This is a last ditch option, but may be your final chance to remove a judgment from your credit report.

If you'd like more information on repairing your credit, check out the Credit Secrets Bible. For the best hidden credit tips, subscribe to our free credit secrets newsletter.