In July of 2017, the credit agencies announced a huge new change. From now on, most new judgments from court proceedings will NOT appear on credit reports. There are new requirements for more personally-identifying information to ensure that they are correct. Also, tax liens may not appear as well. So, that means that millions of Americans will see their credit score go up. See this article in USA Today for the details.
This is great news, because when your credit score goes up, you’ll be able to qualify easier for apartments, home loans, and car loans. And, your interest rates will go down too! But, this won’t automatically increase your score. If you have other negative marks from late payments on bills, or have too much outstanding credit, this change won’t help much. You can check to see what information is on your credit reports by going to annualcreditreport.com. You are allowed one free report from each of the 3 credit bureaus each year. This won’t give you your score, but you’ll have an idea of what negative information is on your credit report. Experts predict that removal of the lawsuit information will give about a 10-point bump to your score.
But, is that the end of the story? Not by a longshot! Court judgments and tax liens last a lot longer than the time they are on your credit. The federal and state government can collect on tax liens for decades, and can seize your tax refunds, freeze bank accounts, collect against real estate and personal property, and garnish wages. Creditors that received judgments can also collect for many years, and have the ability to revive judgments to collect on them even longer. Your paycheck and bank accounts will not be safe from their reach.
The lesson here is that even though a judgment or tax lien may drop off of your credit report, these debts can still haunt you for years to come! Do not ignore these debts; rather, call an attorney to take care of these problems. You’ll learn the lesson the hard way if you do not.
Daniel J. Winter
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois