Will Filing a Lawsuit Harm My Credit Score?

Filing a lawsuit will not immediately impact your credit score and does not require the assistance of an attorney, though in some cases you will want to secure the help of a qualified lawyer. Before filing a lawsuit, you must make sure your case has validity. Suing another person just to cause trouble can be constituted as a crime of extortion in some states. At the very least, you could be subjected to hefty legal fees for filing a frivolous lawsuit. If you lose your case or are sued by another person or company then a "judgment" entry will appear on your credit reports; this can dramatically reduce your credit rating.

One of the most common types of lawsuits involves personal injury. If you slip and fall at someone's home or business because he did not mop up a puddle of water, you have just cause to proceed with filing a lawsuit against that person and it will likely never backfire onto your credit score. Usually, you or an attorney would sue that person's insurance company. However, if the other party was grossly negligent and has significant assets he could also be the subject of a lawsuit.

Broken contracts are another common reason to sue someone. If you worked for a business and they failed to pay you as agreed, you have the legal right to sue the company's owner. If you own a business and customer does not pay as agreed, you can proceed with filing a lawsuit. Likewise, if someone borrowed money from you and did not pay it back as promised you could sue him in court. Hopefully you have good documentation to back up your case. Otherwise, the judge could end up deciding the case simply based on which party's claim he finds most believable.

Poor healthcare is another reason people try filing a lawsuit. If a doctor or nurse does not diagnose your illness properly or refuses reasonable treatment, you possibly have grounds for filing a lawsuit. Some people also sue their health insurance companies for failing to approve payment for treatments such as medically necessary weight loss surgery or breast reductions. Again, this type of legal case will probably never affect your credit score.

If a company proceeds with filing a lawsuit against you, this will probably impact your credit score especially if you are being sued for an unpaid credit card debt, loan, or medical bill.

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