It used to be that consumers feared civil lawsuits, knowing that any money judgment entered against them would show up on a credit report. A judgment could prevent an individual from obtaining any form of new credit including mortgages and auto loans. Judgments can still impact your ability to get credit, just not in the same way.
For the record, a money judgment is a monetary award handed down in a civil lawsuit. The vast majority of money judgments are linked to debt collection cases. They are the result of consumers not paying their bills only to be sued by their creditors.
Judgments and Credit Reports
It used to be that money judgments were included on credit reports. But at some point, consumer advocates began lobbying for changes based on the belief that showing judgments on credit reports was unfair to consumers because merely listing the judgments doesn’t tell the whole story.
In 2015, the nation’s three major credit reporting agencies agreed to stop including judgments in tax liens as part of and deal with the federal government. The deal was named the National Consumer Assistance Plan (NCAP).
In 2018, the credit reporting agencies officially dropped judgments from their records. Now, a lender or credit card company looking at your credit report will find no evidence of a money judgment against you. But a judgment could still hurt your ability to get new credit.
The Abstract of Judgment
Creditors would have no way of knowing about a money judgment against you merely by running a credit report. But they could still find the truth by searching for an abstract of judgment.
Judgment Collectors is a Salt Lake City, UT collection agency specializing in money judgments. They explain that an abstract of judgment is an official court document drafted after a judgment has been handed down. Once certified and entered into the court’s records, the judgment itself is official and enforceable.
Here is the thing: abstracts of judgment are public record. They appear in the court’s index of cases. One of the reasons county clerks index abstracts of judgment is to make them more searchable. And now that public records are online and easily searched with browsers and AI tools, an abstract of judgment is pretty easy to find.
A Reason to Search
Although finding an abstract of judgment is not as easy as running a quick credit report, it is still a lot easier than it used to be. A good investigator can uncover an abstract of judgment in under an hour. It really doesn’t take that much effort for someone who knows what he is doing.
This begs the question of why a lender might search for abstracts of judgment. Lenders do it to protect themselves. They are not in the business of making risky loans to consumers with a habit of not paying their bills. An abstract of judgment, though it does not prove a consumer poses excess risk, is still evidence that a lender needs to be cautious.
Avoid a Judgment Altogether
From the consumer’s perspective, the same sound advice financial experts were giving decades ago still applies today. The best way to guarantee that an abstract of judgment doesn’t harm your credit is to avoid a judgment altogether. Do not put yourself in a situation that can result in a civil lawsuit.
Judgments can still impede your ability to obtain new credit even though they are no longer included on credit reports. Thanks to the digital era and online public records, abstracts of judgment can be found easily by any lender willing to look.
