Which Legal Items can appear on your Credit Report?
You may be wondering which legal items can appear on your credit report? There are three kinds of legal or public items that can appear on your credit report. These include Bankruptcy, Unpaid Tax Liens, and Civil Judgments.
Bankruptcy is one of the most destructive legal items that can appear on your credit report. To declare bankruptcy, a judge reviews your assets, income, & liability to determine how much of your debt gets discharged. There are two types of bankruptcies, Chapter 7 and Chapter 13.
- A Chapter 7 Bankruptcy is when you pay part of your debt and get pardoned of the rest. This type of bankruptcy stays on your report for a total of 7 years.
- A Chapter 13 bankruptcy is when you are unable to pay and get completely discharged of your debts. This type of bankruptcy will stay on your report for ten years. Most creditors won't even consider you if you have a bankruptcy on your credit report. It's essential to analyze your financial situation and consider the alternatives before declaring bankruptcy.
"Bankruptcy is one of the most destructive negative items that can appear on your credit report."
Unpaid Tax Liens
When you decide to evade or dodge paying your taxes, it puts a tax lien on your credit report. A lien is when the government has to secure payment for an unpaid liability by taking an asset such as your property. Tax liens can stay on your report until they are paid.
Unpaid liens leave a derogatory mark on your credit report. Even after a tax lien is paid, you may have to do extra work to have these items removed from your credit report. In regards to getting them off of your report; the laws surrounding tax liens varies depending on the type of tax lien and where you live. It's recommended to stay up to date on your taxes, so these liens don't end up on your credit report in the first place.
A civil judgment is a broad name for this type of derogatory mark that can end up on your report. A civil judgment is a ruling against you in court that was non-criminal. For example, a child support case or a civil lawsuit. These types of marks are not always included in your report, and a creditor doesn’t send it to the bureaus to add it. The credit reporting bureaus check public records, and if it pertains to your financial risk, they add it to your report.
It's very common the find questionable legal items on your credit report. Luckily our Government has established laws and protocols in place that allow you to maintain an accurate credit history. If you notice any of the mentioned items in this article appear on your credit report, you may want to look into credit repair. A credit repair company will review your credit file with you and develop a plan to rebuild your credit score as quickly as possible.