Credit Score

Dear Liz: I don’t have a credit score. I have one item on my credit report that’s a court judgment. What can I do to get a score? If I pay the balance due for the judgment, would it be removed?

Answer: Paying a judgment doesn’t remove it from your credit reports, but it does limit the amount of time that the judgment can hurt you.

By federal law, an unpaid judgment can remain on your reports for seven years after it was entered against you. But creditors often have 10 to 20 years, depending on the state, to use the judgment to garnish your paycheck or put a levy on your bank account. Some states allow creditors to renew a judgment that hasn’t been paid, which means that it could pop back up on your credit reports after the initial seven-year period has expired.

To answer your other question, you get credit scores by having and using credit. The leading FICO formula needs six months’ of credit history to generate scores. One way to get credit if you don’t have any is with a secured credit card. These cards typically give you a line of credit equal to the deposit you make at the bank that issues the card. Use the card lightly but regularly and pay the balance on time and in full each month. You don’t need to pay credit card interest or carry debt to create good scores.

Another option is a “credit builder” loan, sometimes offered by member-owned credit unions. One form of credit builder loan puts your payments, minus interest, into a certificate of deposit that’s yours to keep once you’ve made the final payment. With one loan, in other words, you build your credit and your savings.

You can build credit either way, but having both types of credit — revolving accounts such as credit cards and installment loans such as a credit-builder loan — can help you build it faster.