What are derogatory marks on your credit report and how can you fix them?

What are Derogatory Marks?

Derogatory marks are negative entries on your credit report that indicate a history of financial challenges or unfavorable credit behavior. These marks can lower your credit score and stay on your credit report for several years, depending on the type of derogatory mark. Common derogatory marks include:

Late Payments

Late payments occur when you fail to make payments on time. Creditors may report late payments ranging from 30 to 180 days overdue. The more severe the delinquency, the more significant the negative impact on your credit.

Collection Accounts

When an account is sent to a collection agency due to non-payment, it becomes a collection account on your credit report. This is a serious derogatory mark that can significantly lower your credit score.

Charge-Offs

A charge-off occurs when a creditor writes off a debt as uncollectible. While the debt may still be owed, the charge-off status reflects a significant negative impact on your credit.

Bankruptcy

Bankruptcy is a severe derogatory mark that remains on your credit report for several years. It indicates that you’ve undergone a legal process to discharge or restructure your debts.

Foreclosure

If you’ve defaulted on a mortgage loan, resulting in the loss of your property, a foreclosure will be reported on your credit. This has a substantial negative impact on your credit score.

How to Fix Derogatory Marks

Review Your Credit Report

Obtain a copy of your credit report from each of the three major credit bureaus – Equifax, Experian, and TransUnion. Review the report carefully to identify any derogatory marks.

Dispute Inaccuracies

If you spot inaccuracies related to derogatory marks on your credit report from any of the three major credit bureaus, dispute them with the credit bureaus. You can initiate a dispute online at:

• Transunion
• Equifax
• Experian

Provide supporting documentation, such as proof of payment or evidence of errors, to support your dispute.

Negotiate Pay-for-Delete

For outstanding debts, consider negotiating a pay-for-delete agreement with the creditor. In this arrangement, you agree to pay the debt, and the creditor removes the derogatory mark from your credit report. Note that not all creditors are willing to do this.

Settle or Pay

If you can’t negotiate a pay-for-delete, consider settling the debt for less than the full amount or paying it in full. While the derogatory mark may not be removed, it will be updated to reflect a paid status, which is less damaging than an unpaid status.

Seek Professional Assistance

If dealing with complex issues or facing challenges in negotiating with creditors, consider seeking professional assistance. Legal professionals handling credit repair can provide guidance and support.