Small Claims Court

[axxy]

If you get a judgment against you in small claims court, does it go on your credit report as a public record?  How do the CRA's determine which judgments go on your credit report and which don't?  And how does FICO determine which judgments should affect your scores?

[Anonymous]

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@axxy wrote:

If you get a judgment against you in small claims court, does it go on your credit report as a public record?  How do the CRA's determine which judgments go on your credit report and which don't?  And how does FICO determine which judgments should affect your scores?

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You can be pretty sure that the judgment will go on your credit report.  That is one way that they use to get you to pay the judgment.  As for your last question any judgment will affect your score.  The severity of its affect will be diminish as time goes on.  Additionally in some of the newer scoring models coming out medical charge offs are not scored severely.

[axxy]

For example, say you have a brick wall between your house and your neighbor's house.  And your neighbor's kid walks on top of the brick wall and falls off, resulting in a $1000 hospital bill for minor injuries.  Your neighbor says your insurance should cover it because it's your brick wall.  You say your neighbor's insurance should cover it because your neighbor's kid was at fault.  Both insurance companies deny the claim.  So you end up in court, but, because it's only $1000, it's small claims court.  If your neighbor wins, it ruins your credit?

[ojefferyo]

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@axxy wrote:

For example, say you have a brick wall between your house and your neighbor's house.  And your neighbor's kid walks on top of the brick wall and falls off, resulting in a $1000 hospital bill for minor injuries.  Your neighbor says your insurance should cover it because it's your brick wall.  You say your neighbor's insurance should cover it because your neighbor's kid was at fault.  Both insurance companies deny the claim.  So you end up in court, but, because it's only $1000, it's small claims court.  If your neighbor wins, it ruins your credit?

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That's a different type of judgement

[NRB525]

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@axxy wrote:

For example, say you have a brick wall between your house and your neighbor's house.  And your neighbor's kid walks on top of the brick wall and falls off, resulting in a $1000 hospital bill for minor injuries.  Your neighbor says your insurance should cover it because it's your brick wall.  You say your neighbor's insurance should cover it because your neighbor's kid was at fault.  Both insurance companies deny the claim.  So you end up in court, but, because it's only $1000, it's small claims court.  If your neighbor wins, it ruins your credit?

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Depending on just how hypothetical this hypothetical is, you should expect your property liability company to at least represent you when a lawsuit is filed. You may have a $1,000 deductible you end up paying, but when a lawsuit is filed against you, your insurance company doesn't abandon you because they don't want the situation to spiral out of control.

Do you face an actual claim of $1,000 or you are just wondering?

[axxy]

It's a hypothetical example.  I just want to know how the CRA's determine whether a judgment should go on your credit report.  Do they have people manually evaluating each judgment, or is there some kind of formula they use to automate it?

[Anonymous]

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@axxy wrote:

It's a hypothetical example.  I just want to know how the CRA's determine whether a judgment should go on your credit report.  Do they have people manually evaluating each judgment, or is there some kind of formula they use to automate it?

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If the judgment is against you, it will show on your credit report. Small claims judgments are no different than other judgments for credit related purposes. The only thing that matters is who the judgment is against. Judgments against you will effect your credit even after they are paid. Once paid, the effect is less (though I hear the effect is on a lender's willingness to lend and not on your FICO score, but I am not sure). It might take 1-3 months for the judgment to show on your report, but it eventually will if you are the judgment debtor (i.e. defendant who was found liable to pay the judgment). 

To clarify some other points made by other posters:

@NRB525 - Small claims court is often different from other courts. It varies from state to state, but in some states, like California, there is a rule against representation. Meaning attorneys and insurance companies cannot represent you in these states in small claims court. The insurance company can still consult with you and its attorneys can advise you, they just might not be able to represent you in court (again varies from state to state). 

@ojefferyo - What do you mean by different type of judgment. Either way you are looking at a monetary judgment from a civil (small claims) court. The underlying cause of action (e.g. contract, tort, etc) does not matter. A judgment for money in a civil court will generally show up on ones credit report if they are the judgment debtor.  

[Anonymous]

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@axxy wrote:

If you get a judgment against you in small claims court, does it go on your credit report as a public record?  How do the CRA's determine which judgments go on your credit report and which don't?  And how does FICO determine which judgments should affect your scores?

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Different states handle the smaller courts differently but almost all of them handle one thing the same: Small claims/conciliation court judgments do not natively go on your credit report. Almost always, and after the time to appeal or overturn has passed, can the judgment holder take the SC/CC judgment and docket it (some states call it transcribing it) to disctrict court or the "higher" court. At that point it become part of the searchable public record and then could possibly affect your credit.

Now, this does not mean that without the docketing the judgment holder cannot do things like levy, garnish wages, lien property, etc.

[Anonymous]

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@Anonymous wrote:

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@axxy wrote:

If you get a judgment against you in small claims court, does it go on your credit report as a public record?  How do the CRA's determine which judgments go on your credit report and which don't?  And how does FICO determine which judgments should affect your scores?

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Different states handle the smaller courts differently but almost all of them handle one thing the same: Small claims/conciliation court judgments do not natively go on your credit report. Almost always, and after the time to appeal or overturn has passed, can the judgment holder take the SC/CC judgment and docket it (some states call it transcribing it) to disctrict court or the "higher" court. At that point it become part of the searchable public record and then could possibly affect your credit.

Now, this does not mean that without the docketing the judgment holder cannot do things like levy, garnish wages, lien property, etc.

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From my understanding, small claims judgments in the majority of states are public records that eventually make their way to your credit report. Again the small claims or equivalent process varies extensively from state to state. Also, be careful about mixing conciliation with small claims. While many small claims courts have conciliation processes, the outcome when conciliation fails is often a civil judgment. If conciliation is a success and a judgment is not entered, then you are unlikely to see anything on a credit report (e.g. mediated agreements/stipulated orders without a judgment). 

The following is a response from Experian that is on-point to your question - http://www.experian.com/blogs/ask-experian/2013/08/13/small-claims-judgments-are-reported-to-credit-bureaus/