Derogatory Public Record or Collection Filed |
By Kenneth Long on September 22, 2010
.jpg.aspx?width=75&height=75)
Credit reports can list derogatory public record or collection filed even if there is no record of an original delinquent credit account. This is due to the fact that while lenders must report credit information for addition to your credit file, evidence of judicial action is actively pursued by credit bureaus.
When a party takes you to court and wins a judgment, this legal action is documented as a part of public record. Information is gathered from public court records which can become a part of your credit history. For this reason, you may see this risk factor appear on your credit report for accounts that were not originally a part of your credit history.
This risk reason is one of the most severe credit scoring factors. It tells future lenders that not only are you a bad credit risk, but that they may have to resort to legal action to force repayment of an unpaid debt.
If a credit account was reported to your credit bureaus and it subsequently went to court, then you may also see the similar risk code identifying a serious delinquency and public record or collection filed. Both are highly damaging factors that can sink a credit score for many years.
There is a way to limit the damage if you have experienced adverse legal action that is recorded on your credit report. By paying a judgment, you can have the record updated to show that the judgment has been satisfied. This does not remove the record from your credit report, but it does change it to show that you no longer owe money to that collector.
That can cause a slight upswing in your credit score. Of course, your score will continue to suffer until the record is removed. While normal negative account information remains on your credit report for 7 years, judgments can remain for 10.
As long as you correct the damage and protect your positive credit accounts, your credit scores will improve. You can still become eligible to purchase a home by obtaining a mortgage as long as your scores improve enough to qualify and you have no outstanding judgments or major amounts owed on delinquent or defaulted debts.
Note: Derogatory public record or collection filed is credit bureau risk score reason 40. Code D4 is assigned for NextGen scores. |
Current Rating: 0 (0 ratings)