Loan approvals are based on your credit history. While a wage garnishment does not appear on your credit history, the lawsuit preceding your wage garnishment does. This can affect your ability to get approved for a loan.

How long does a garnishment stay on your credit?

seven years
A garnishment judgment will stay on your credit reports for up to seven years, affecting your credit score. But there a few easy ways to bolster your credit, both during and after wage garnishment. Building a budget — and sticking to it — can help you stay on top of your finances to avoid another garnishment.

What happens if you get a wage garnishment?

If you stop paying down a debt, your creditor may sue you and request a wage garnishment. A portion of each paycheck will be withheld to pay the debt. Any lawsuit that results in garnishment leaves a judgment on your credit report. Judgments adversely affect your credit score and can cause you to be turned down for a loan.

How does a garnishment affect your credit score?

Once you’ve satisfied a garnishment order by paying off your debt through paycheck deductions, your credit score should improve if your debt-to-income ratio doesn’t change. Generally speaking, creditors can’t garnish more than 25 percent of your gross earnings after mandatory deductions.

Can you get a loan approval after a garnishment?

You may be garnished for these debts while maintaining decent credit, which increases your chances of a loan approval. Even if you are still being garnished, you may get a loan approval if the judgment did not occur recently.

How much can a creditor garnish from your pay?

There’s a limit to how much creditors can garnish from your wages. Under federal law, the garnishment amount can’t be more than 25% of your net (take home) pay, or the amount by which your take home exceeds 30 times the federal minimum wage (currently set to $7.25/hour), whichever is less.