In a nutshell, any negative information about your financial history, such as late payments or bankruptcy, may show up as a “derogatory mark” on your credit reports. There are a few ways to deal with it, even though it might remain there for years: challenge the mark if it’s incorrect, begin repairing your credit, or bide your time. Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect.
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A derogatory mark is a negative item on your credit report that can significantly impact your credit score. These marks can be caused by various factors, including missed payments, collections, repossession, and foreclosure. While the specific impact of a derogatory mark on your credit score depends on several factors, such as the severity of the mark and your overall credit history, it can generally lower your score by 50 to 100 points or more.
How Long Do Derogatory Marks Stay on Your Credit Report?
The length of time a derogatory mark stays on your credit report depends on the type of mark and the credit bureau reporting it Here’s a breakdown:
| Type of Derogatory Mark | Equifax & Experian | TransUnion |
|---|---|---|
| Late Payments | 7 years from the delinquency date | 7 years from the delinquency date |
| Charge-offs | 7 years from the charge-off date | 7 years from the charge-off date |
| Collections | 7 years from the delinquency date | 7 years from the delinquency date |
| Bankruptcy | 7 years from the filing date | 10 years from the filing date |
| Repossession | 7 years from the repossession date | 7 years from the repossession date |
| Foreclosure | 7 years from the foreclosure date | 7 years from the foreclosure date |
| Tax Liens | 7 years from the filing date | 7 years from the filing date |
| Civil Judgments | 7 years from the filing date | 7 years from the filing date |
How to Deal with Derogatory Marks on Your Credit Report
If you have derogatory marks on your credit report, don’t despair. There are steps you can take to mitigate their impact and improve your credit score over time. Here are some tips:
- Review your credit reports regularly: Check your credit reports from all three major credit bureaus (Equifax, Experian, and TransUnion) at least once a year. You can get free copies of your credit reports from AnnualCreditReport.com.
- Dispute any errors: If you find any errors on your credit reports, dispute them with the credit bureaus. You can do this online, by mail, or by phone.
- Make all payments on time: This is the best way to avoid future derogatory marks. Set up reminders to pay your bills on time, and consider using automatic payments.
- Keep your credit utilization low: This means using only a small percentage of your available credit. Aim to keep your credit utilization below 30%.
- Apply for new credit sparingly: Every time you apply for new credit, a hard inquiry is placed on your credit report. Too many hard inquiries can lower your credit score.
- Consider credit counseling or debt management: If you’re struggling to manage your debt, consider seeking help from a credit counselor or debt management company.
While derogatory marks can be a significant setback, they don’t have to derail your financial future. By taking steps to improve your credit habits and manage your debt responsibly, you can overcome the negative impact of derogatory marks and build a strong credit score. Remember, it takes time to repair your credit, so be patient and persistent in your efforts.
Review your credit reports
Your credit reports may show “closed” and “open” derogatory marks. Negative information about closed accounts, such as those in collections or accounts that have been charged off, is referred to as closed derogatory marks. Negative information regarding an open account, like your current credit cards or loans, is referred to as an “open derogatory mark.”
Verify the accuracy of all the data on the reports, including your personal data, open and closed accounts, and adverse information. Check for delinquent payments under all your accounts, and then look for public records and accounts in collections.
How to deal with derogatory marks
Bruce McClary, spokesman for the National Foundation for Credit Counseling, advises checking your credit reports at least once a month because you can’t address a negative mark if you are unaware of it. With a Credit Karma account, you can generally monitor your Equifax and TransUnion credit reports for free and take advantage of tools to help you identify and challenge inaccurate negative marks.
Here are steps you can take if you have a derogatory mark on your credit reports.
How long do negative items (derogatories) stay on my credit report?
FAQ
Can a derogatory mark be removed from credit?
Do derogatory marks go away after 7 years?
Is it true that after 7 years your credit is clear?
Should I pay a closed derogatory account?