Some public records can have an adverse affect on your credit score, so you need to carefully consider whether it is worth going to small claims court versus reaching a settlement with the other party outside of court.
Public records are legal documents created and maintained by Federal and local governments, which are usually accessible to the public. Some public records, such as divorces, are not considered by your credit score, but adverse public records, which include bankruptcies, judgments and tax liens, are considered by the credit score. Your score can be affected by the presence of an adverse public record, whether it’s paid or not.
Judgments will almost always have a negative affect, to your credit scores.Before letting a bill or credit obligation get to the courthouse, see if there is an alternative that might work. Reach out to the person or company that you owe money to and see if some sort of arrangement can be worked out. If you are dealing with a collection agency or other company, they may be willing to work out a settlement with you that is equitable as it’s almost always more efficient for them to work with you directly than through the courts.