How To Remove a Vacated Judgment from Your Credit Report

Court judgments typically stay on your credit report for seven years from the date of filing. But what if a judgment was vacated by the court?

In an ideal situation, this vacated judgment would be automatically removed from your credit report as the credit agency collects data from the court system. Realistically, however, it may take some time for your credit report to be updated to reflect the vacated judgment, and it is wise to be proactive, particularly if you will be applying for a loan in the near future.

The first step is to obtain a copy of your credit report from each of the three credit reporting agencies (Equifax, TransUnion, and Experian). Reports are available for a nominal fee. Federal law also allows you to obtain one free credit report from each of the three agencies every twelve months.

Once you obtain a report, review it carefully for accuracy. Assuming the vacated judgment still appears on your report, you will have to initiate a dispute with each agency.

Each agency’s process may be slightly different, but you will need to provide each agency with a letter disputing the judgment along with the court order vacating the judgment. Depending on the agency, you may be able to submit the court order online. The dispute generally must be resolved within thirty days.

Supreme Court Rules on Securities Fraud Class Actions

A United States Supreme Court decision near the end of its last term makes it more difficult for investors to pursue class action suits alleging securities fraud, but it does not effectively prevent such actions altogether.

The case involved a challenge to Basic Inc. v. Levinson, a 1988 decision in which the Court adopted a “fraud on the market” theory in securities fraud class action suits. In these securities fraud cases, a presumption arises that a company’s false statements improperly inflated the share prices and that investors relied on that inflated price when they bought. This presumption helps plaintiffs fulfill the requirements for a class action suit of Rule 23 of the Federal Rules of Civil Procedure, particularly the need for “questions of law or fact common to the class.”

In the June decision in Halliburton Co. v. Erica P. John Fund, the Court held that companies can rebut this presumption during the class certification stage of litigation with evidence showing that the stock price was not inflated. Prior law prevented this evidence until the merits of the case were at issue, thus encouraging earlier settlements.

The impact of the ruling is unclear. Although the court did not abolish the “fraud on the market” presumption altogether, it did allow corporate defendants to offer contrary evidence earlier in the litigation process.

The New York Times has a summary of the decision, and Forbes and the Wall Street Journal have full discussions of the potential impact of the ruling.