How Can Public Records Affect My Credit Score?
When you pull a copy of your credit report, you may expect to find information about your credit accounts and payment history. But if you have any public records in your name, those may also be listed in your credit report, and could have a significant impact on your credit score and your ability to qualify for credit at the most competitive rates.
What is a public record?
Public records are legal documents that are on file with federal and local governments and that the public typically can access. Adverse public records that could be listed in your credit report include:
Bankruptcies- A bankruptcy is a legal proceeding in which a consumer is discharged of all—or in some cases only a portion—of his or her unsecured debt.
Tax liens- A tax lien is filed against a consumer if he or she fails to pay taxes.
Judgments- If a consumer loses a lawsuit in court, a judgment is the resulting debt that is owed. In addition to compiling information about your credit behavior collected from creditors—including banks, credit card issuers, and mortgage lenders—credit reporting agencies (CRAs) also purchase public record information from public record providers. That’s how this type of information winds up on your credit report.
It’s important to note that credit bureaus are only a repository for the information that your credit grantors report or the data that is gleaned from public records. National CRAs, doesn’t generate this information on its own.
Can a public record affect my credit score?
All public record items on your credit report are considered negative information, which means they could hurt your credit score. This even holds true if a public record has been paid. If you have a judgment on your credit report, for example, and you have made the necessary payment to satisfy the debt, it could still reflect negatively on your credit score. Fortunately, the negative impact a public record has on your credit score will typically subside over time.
Bear in mind that public records won’t be on your credit report forever; however, it should be noted that most public records are removed from your credit report after seven years!
Judgments, for example, will generally remain on your credit report for seven years from the date filed, regardless of whether or not the debt has been paid.
Paid tax liens will typically stay on your credit report for seven years from the date paid, while unpaid tax liens can remain on your credit report for 15 years or longer.
The length of time a bankruptcy remains on your credit report will depend on the type of bankruptcy filed. A Chapter 7 or 11 bankruptcy, as well as a non-discharged or dismissed Chapter 13 bankruptcy, will typically remain on your credit report for 10 years from the date filed. A discharged Chapter 13 bankruptcy, on the other hand, will usually only stay on your credit report for seven years from the date filed.
When a public record item falls off of your credit report, it will no longer impact your credit score and creditworthiness.
What should I do if I have a public record on my credit report?
If you pull a copy of your credit report and find a public record listed, ensure the information is accurate and up to date. If the public record is there in error or should have already fallen off of your credit report, contact the CRA reporting the erroneous information and file a dispute. If in fact the public record is accurate seek legal assistance to address the amount owed and handle as soon as possible.
If your credit history has suffered as a result of a public record, work on re-establishing your creditworthiness. Open new accounts responsibly, and pay all of your bills on time. You should also strive to keep your credit utilization ratio—or how much of your available credit you are using—at or below 30 percent.
Remember that you cannot change your credit score overnight, but if you practice positive credit behavior, with time you could see your score begin to improve.
If you think you may have possibly incurred a public record on your credit profile and would like to know if you are being affected and what can be done contact us today.