How do public records and judgments affect my FICO score?
My mechanic is taking me to small claims court for additional work he did on my car that I did not approve. I don't think I should have to pay him for work I feel was not necessary, especially since he didn't get my approval first. Will this affect my credit?
When you are taken to small claims court and a judge makes a ruling against you, this judgment is considered a public record. Some public records can have an adverse affect on your FICO® score, so you need to carefully consider whether it is worth going to small claims court versus reaching a settlement with your mechanic outside of court.
Public records and your FICO score
Public records are legal documents created and maintained by Federal and local governments, which are usually accessible to the public. Some public records, such as divorces, are not considered by your FICO score, but adverse public records, which include bankruptcies, judgments and tax liens, are considered by the FICO score. Your score can be affected by the mere presence of an adverse public record, whether paid or not.
Adverse public records will have less affect on your FICO score as time passes, but they can remain on your credit report for up to 10 years based on what type of public record it is. Judgments specifically remain on your credit report for 7 years from the date filed. Find out more specific information on how long negative information remains on your report.
Dealing with a judgment on your credit report
Judgments will almost always have a negative affect, if not directly to your FICO score, then to your general stress level when you receive a formal court appearance letter and then have to deal with going to court. Before letting a bill or credit obligation get to the courthouse, see if there is an alternative that might work. Reach out to the person or company that you owe money to and see if some sort of arrangement can be worked out. If you are dealing with a collection agency or other company, they may be willing to work out a settlement with you that is equitable as it's almost always more efficient for them to work with you directly than through the courts.
The Score That Matters®
The FICO Score is the standard credit score in the US, used in more than 90% of lending decisions.