Credit reports can list derogatory public record or collection filed even if there is no record of an original delinquent credit account. This is due to the fact that while lenders must report credit information for addition to your credit file, evidence of judicial action is actively pursued by credit bureaus.
| “Derogatory Public Record or Collection Filed” | Credit Score Risk Factor Codes |
| Equifax | 40 |
| Experian | 40 |
| TransUnion | 40 |
| NextGen | D4 |
When a party takes you to court and wins a judgment, this legal action is documented as a part of public record. Information is gathered from public court records which can become a part of your credit history. For this reason, you may see this risk factor appear on your credit report for accounts that were not originally a part of your credit history.
This risk reason is one of the most severe credit scoring factors. It tells future lenders that not only are you a bad credit risk, but that they may have to resort to legal action to force repayment of an unpaid debt.
If a credit account was reported to your credit bureaus and it subsequently went to court, then you may also see the similar risk code identifying a serious delinquency and public record or collection filed. Both are highly damaging factors that can sink a credit score for many years.
There is a way to limit the damage if you have experienced adverse legal action that is recorded on your credit report. By paying a judgment, you can have the record updated to show that the judgment has been satisfied. This does not remove the record from your credit report, but it does change it to show that you no longer owe money to that collector.
That can cause a slight upswing in your credit score. Of course, your score will continue to suffer until the record is removed. While normal negative account information remains on your credit report for 7 years, judgments can remain for 10.
As long as you correct the damage and protect your positive credit accounts, your credit scores will improve. You can still become eligible to purchase a home by obtaining a mortgage as long as your scores improve enough to qualify and you have no outstanding judgments or major amounts owed on delinquent or defaulted debts.
Note: Derogatory public record or collection filed is credit bureau risk score reason 40. Code D4 is assigned for NextGen scores.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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