What do I do about a judgement on my credit report?

What does it mean to have a judgement against you?

If you have a judgement against you, this means that a court has instructed you to pay an outstanding amount owed to one of your credit providers. It is a very important category when it comes to your payment history and if you have a judgement against you, this will seriously affect your credit score. It can remain on your credit report for five years and this will negatively impact your ability to get any other credit in the future.

Remember that once a judgement has been filed, it will start to build interest. If you have a judgement against you, the creditor will attempt to collect the payment from you. The longer you postpone this payment, the higher the amount becomes that needs to be collected from you, because of the interest.

Here are the steps you should take to have a judgement cleared from your credit report

  1. On your credit report, you will be able to see who has listed a judgement against you. You should contact the attorneys that have a judgement against you and ask them for your outstanding balance.
  2. It’s time for you to negotiate a settlement amount. If you are unable to pay back the settlement amount as one payment, you will also need to negotiate a payment plan. Once you have reached an agreement, the attorneys will issue you with a Consent for Rescission of Judgement.
  3. Once your outstanding amount has been settled, you can ask the attorneys for a Paid-Up Confirmation and Consent of Rescission of the judgement. You need to ensure that the magistrate has the Consent of Rescission before you’re able to go to court.
  4. You can now contact the involved court to schedule a hearing.
  5. At the court, you must give the Consent of Rescission to the clerk. You will be issued with a Rescission court order. Make sure that you submit this court order to the credit bureaus.
  6. Someone from the credit bureaus will validate the rescission court order and your judgement should be removed accordingly.
  7. You should attempt to negotiate a settlement for the amount. Once it has been paid, a “satisfaction of judgement” will be filed with the court. Once the satisfaction has been filed, your credit reports will be update accordingly.

What does it mean when an account is adverse within the last 12 months?

Your adverse classification can be for two reasons:

Not paying an account

Firstly, it could be that you have not been paying an account and the credit provider has acted by sending you a letter of final demand. If you do not pay the full amount owed, this information will remain on your credit report for a year. However, if you pay the full amount before this time, the adverse information will be removed when the credit bureau receives the proof of payment from the credit provider.

Repeated behaviour with regards to credit repayments

The second reason could relate to your repeated behaviour with regards to credit repayment. For example, if you are consistently paying your credit provider, but your payments are late, your credit provider may classify you as a “late” payer. This adverse classification will remain on your credit report for a year. However, if you pay the full amount before this time, the adverse information will be removed when the credit bureau receives the proof of payment from the credit provider.

What can you do to avoid an adverse account?

To avoid this adverse classification in the future, you need to ensure that you are on time with your credit repayments. With most credit providers, you should be able to set an automatic payment for the amount that you select. This will help you make sure that you’re not accidentally missing a payment. If your credit provider does not allow you to set this automatic payment you should write down your payment deadlines and set reminders on your phone so that you are consistently paying your bills on time.

What factors make up my credit score?

How is my credit score calculated?

Understanding what factors impact your credit score can be confusing, especially when you consider that the different credit bureaus use different scoring models. However, there are several factors that are consistent, regardless of the scoring model. To get the best credit score possible, you should try to improve and maintain the factors that have the highest impact on your score.

What has the highest impact to my credit score?

Your payment history:
Your payment history is a major factor that will affect your credit score. One of the best ways to create and maintain a good credit history is to ensure that you make your credit repayments on time. If you make your payments on time you are showing creditors and future lenders that you’re a safer bet to loan to.

If you are late on a payment or you miss a payment altogether, this can hurt your credit score.

Your credit utilization:
Your credit utilization looks at how much of your available credit you’re using. It’s calculated by dividing your total credit balance by your total credit limits.

An optimal credit utilization is below 30 percent. This means that if you have a R10 000 credit card limit, you should try to keep your balance below R3000. If you keep your credit utilization low, creditors are far more likely to see you as a responsible credit user. Another benefit is that you will have credit available in the case of an unforeseen expense.

Derogatory marks:
A derogatory mark is a negative point on a credit score which generally indicates that a credit repayment has been paid as agreed to. An example of this would be missing a payment or bankruptcy. A derogatory mark can stay on your credit report for up to 10 years. This will in-turn, hurt your score. The amount of time that a derogatory mark stays on your credit report depends on what type of mark it is. There are certain steps that you can take if there is a derogatory mark on your credit report. Firstly, if the derogatory mark is an error, you can dispute it. This can be done by sending an email to consumercare@compuscan.co.za or call 0861 51 41 31 to chat to a friendly consultant. If the derogatory mark is correct you can still improve your credit situation. You can do this by making payments on the accounts that are overdue. You also need to ensure that you consistently make your minimum credit payments on time. Fortunately, if you start taking the right steps to building a solid credit history, your credit score should start to rebound after 2 years.

What has a medium impact to my credit score?

The maturity of your credit accounts:
This factor looks at how long you’ve had and managed credit accounts. Although this factor is not typically one of the most important factors, it does give creditors piece of mind when they see that you’ve managed credit responsibly over a longer period. Closing credit accounts could also negatively affect your credit score, as the age of your credit accounts is calculated by looking at the average of all your accounts.

What has the lowest impact to my credit score?

Hard inquiries:
A hard inquiry usually happens when you apply for a new form of credit and the credit providers do a look-up on your credit score. If you apply for multiple forms of credit, there will be a lot of hard inquiries, as it indicates that you are in serious need of credit. Luckily, this impact on your credit score will be short-lived if you make all your credit payments on time.

All your credit accounts:
This factor looks at all the different types of credit that you have. It is good to have a mix of credit, as it shows creditors that you’ve responsibly loaned money from a range of credit providers. With this being said, you should only apply for new forms of credit if you are financially able to do so.