If you fail to pay credit debt, the creditor may eventually take you to court and obtain a judgment against you for the amount of the debt, often plus attorney fees and/or interest. The judgment entitles the creditor to garnish your wages, a process that results in some portion of your wages going directly from your employer to your creditor until the judgment is satisfied. This also severely impacts your credit score.
Affect of Wage Garnishment on Credit
Both the court judgment against you for failure to pay the debt and the creditor's consequent garnishment of your wages are matters of public record. The three major credit reporting companies -- TransUnion, Experian and Equifax -- use public records like these when evaluating your credit. FICO, the organization that compiles credit scores, does not reveal its methods or criteria in detail but notes that a court judgment and subsequent garnishment will have a "severe" effect on your credit score. Anecdotal accounts from consumers suggest that the drop may range from as little as 6 points to over 150 points. The higher your credit score, the more pronounced the drop will be. The effect diminishes over time but lasts a total of seven years.