Judgments

One section of your credit report shows if there are any public records against you. Public records would be things that have been filed in a court somewhere. If you've filed a bankruptcy it will show under public records. If you have a collection account that went for so many months and you just didn't or couldn't pay it, the creditor may have decided to sue you. If they went to court against you (whether you were in court or not) they got a judgment against you.

Judgments look much worse on a credit report than unpaid collections and you usually won't be able to purchase a home as long as you have an unpaid judgment. You will have to call the courthouse where the judgment is filed in order to pay this off. I'm not aware of a court allowing monthly payments on judgments. They want it paid in full.

Once a judgment is placed against you, then your wages can be garnished and in some cases your bank accounts can be seized. Better to pay those off as soon as possible!

In all my years as a loan officer I did have one case where a man had just recently found out he was a father. An old girlfriend had come forward saying he was the father of her child from 12 years ago. A DNA test was done and it determined he was indeed the father. The court found that he owed 12 years of back child support. They placed an immediate judgment against him and set up monthly child support payments, a portion of which went toward the back child support. Even though he had a judgment against him for over $50,000 in back child support, he was able to show the documentation needed to prove that he had been paying all those child support payments on time as ordered for about a year. In other words, my loan underwriter could see that he wasn't a deadbeat. So he is the only one I've known who had a judgment and was still able to purchase his home with a conforming home loan.

I'm aware that when the sub-prime loan business was booming, anyone with terrible credit could get a home loan that was non-conforming with terrible interest rates and terms. But I didn't originate sub-prime loans. My customers couldn't purchase a home if they had unpaid judgments or unpaid child support except for the one man I mentioned here.