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What Does a Derogatory Mark Mean On a Credit Report?

What Does a Derogatory Mark Mean On a Credit Report?
Sarah Li Cain
Sarah Li CainUpdated December 5, 2023
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Derogatory marks on your credit report are financial missteps, such as late payments or bankruptcies, that can make it hard to get approved for new credit. Further, derogatory marks can have a serious impact on your credit score.In some cases, there are steps you can take to dispute a derogatory item on a credit report. Otherwise, you’ll just have to wait it out — usually for seven to 10 years — and see what other steps you can take to improve your credit in the meantime.

What Is a Derogatory Mark?

Derogatory marks are negative items on your credit reports that typically remain there for many years. Examples include late or missed payments, bankruptcies, collections, foreclosures, and repossessions. These remarks on your credit report generally indicate you haven’t paid back a loan based on an agreement with lenders.You can dispute derogatory marks if you believe it is due to an error. If found to be true, the credit bureaus will request that creditors update their information so the credit bureau will have the correct information. Otherwise, the derogatory mark will remain on your report and could damage your credit score. In most cases, these marks will stay on your credit report for seven to 10 years. Over time, the impact of these items may reduce its effect on your credit, which is why it’s so important to dig into credit card details before getting a new card. 

Do Derogatory Marks Affect Credit Scores?

A derogatory mark on your credit report will most likely damage your credit score. However, how much your score will be negatively impacted depends on several factors.For instance, the type of derogatory mark affects how low your score could dip. A less serious one, such as a late payment, may not be as damaging as a more serious one, such as a bankruptcy. Plus, if you have a low to fair credit score and a derogatory remark, it could impact whether lenders will approve you for loans, and at which rates and terms. (Don’t worry though — there are cards for fair credit scores out there).The amount of time a derogatory mark stays on your credit reports depends on what type of mark it is. Usually, the more serious the mark, the longer it stays on your credit report.Recommended: 5 Factors That May Affect Your Credit Score

How Do Derogatory Marks Usually Happen?

There are several reasons why you’d receive a derogatory mark on your credit report, the most common being a late payment. Take a look at the following chart to see several events that can lead to derogatory marks and how long they’ll stay on your credit report.
Type of Derogatory RemarkWhat It Is and How It WorksHow Long It Stays on Your Credit Report
Late paymentOnce you have a past due on your account payment, the severity will lessen if you continue to make on-time payments. Otherwise, every 30 days, the mark will increase in severity if the payment hasn’t been made.Up to seven years from the late payment date
A charge-off or account in collectionsA creditor may charge off your account if it believes you won’t pay back your debts or you’ve missed several payments. If so, the creditor may sell your debt to a collections agency, where it will try to collect payment from you.Seven years from the first late payment
BankruptcyYou may qualify for several types of bankruptcy to get relief from debt payments, either by having some of them forgiven or arranging a repayment plan.Seven to 10 years, depending on the type of bankruptcy you file
ForeclosureYour mortgage lender will try to recoup their losses if you miss or fall behind on your loan payments by forcing a sale of your home, which you’ve agreed to be used as collateral.Seven years from the foreclosure filing
To find if you have any derogatory marks in the first place, you can request a copy of your credit reports from all three credit bureaus. If you see any and they’re due to an error, you can ask to have them removed by filing a dispute with the credit bureau that has the error.Otherwise, you’ll have to wait for them to be removed from your credit reports — the length of time varies on the type of derogatory mark. 

How Can I Dispute a Derogatory Item on a Credit Report?

To dispute a derogatory item, you can contact the credit bureau or lender that reported the error. You can either call or submit a written request by mail or online.If you call a credit bureau, look up the phone number of the credit bureau you want to contact. Some, like Experian, will have the phone number to call on your Experian credit report. Set aside plenty of time to make the call because you could be put on hold for a while. To be as effective as possible in filing your request over the phone, have all the details ready regarding the dispute, such as the derogatory item, date it appeared on your report, and any proof you have as to why the mark was made in error. It can be helpful to dig into statement details before picking up the phone.Several credit bureaus allow you to dispute items on your credit report online. You’ll most likely need to register for an online account before you can submit your request. For those who want to submit a written request, make sure to include your full name, Social Security number, date of birth, and the details of your request. You can find the mailing address on each credit bureau's website.Once you've submitted your request, all you need to do is sit back and wait. It could take up to 30 days for credit bureaus to complete the dispute process.Recommended: Guide to the Fair Credit Reporting Act

The Takeaway

If you have a derogatory mark on your credit report, you can take proactive steps to remove it. For ones due to errors, dispute it with the credit bureau in question as soon as possible, especially if you’re looking to apply for credit soon. Even if you can’t dispute the derogatory item, there are still ways you can work toward rebuilding your credit. One of the most effective ways to do so is to make on-time payments on existing debt so you’ll be able to show lenders you’re creditworthy. Another option is to limit yourself on how much you borrow, or make sure your credit card balance stays below your credit limit.Finally, you can choose a credit card to help you rebuild your credit by making on-time payments. Before signing up for one, take the time to compare credit cards to find an option that suits your needs.
Photo credit: iStock/​​BartekSzewczyk

About the Author

Sarah Li Cain

Sarah Li Cain

Sarah Li Cain is a finance writer and podcast producer focusing on topics such as credit, insurance, investing, and real estate. Her work has appeared in major publications such as CNBC Select, Forbes, Redbook, and Business Insider.
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