How to Remove Derogatory Items From Your Credit Report - Crediful (2024)

A derogatory mark can significantly impact your credit report and your credit score. Creditors look at both of them when you apply for a loan or credit card, so it’s essential to understand what’s hurting your credit.

Any negative item on your credit report is considered derogatory. However, there are several distinctions to be made for each type.

Find out the basics of derogatory marks and how each kind affects your credit. Then you can decide on the best course of action to fix your finances.

Once you improve your credit score, you’ll benefit from better interest rates and larger credit limits. The first step to getting there is to get rid of derogatory items, so keep reading for more information.

What is a derogatory mark?

A derogatory mark refers to any negative item listed on your credit reports from Experian, Equifax, and TransUnion.

The three major credit reporting agencies receive information from participating companies, such as credit card companies, lenders, mortgage servicers, and phone carriers.

Most negative items stay on your credit reports for up to seven years. However, some are more severe and can last as long as ten years from the date of the account’s last activity.

It’s crucial to understand the different types of derogatory marks so you know how you can avoid adding any new ones to your credit report in the future.

Here’s a rundown of some of the most common types of derogatory marks. We’ll then show you exactly how to find them on your credit report so you know precisely what might be affecting your credit.

Late Payments

Perhaps the most common derogatory mark you can have on your credit report is a late payment. A creditor can report late and missed payments 30 days after they are due. Missed payments typically stay on your credit report for up to seven years from the date of the first delinquent payment.

A missed payment is upgraded to a higher level of severity every 30 days. So, you could also see late payments that are 60, 90, or even 120 days late as part of your payment history. Your credit score drops further for every 30 days the payment remains late.

Collections

Once a creditor has charged off an account, it’s written off as a loss for tax purposes and sold to a collection agency for pennies on the dollar. This usually happens after the debt is 120 days late and results in having a collection account on your credit report.

Bankruptcy

If you’ve entered into bankruptcy over the last several years, it will be listed on your credit report. It’s part of the trade-off for absolving a large portion of your debt. A Chapter 13 bankruptcy will typically stay on your credit report for up to seven years from your filing date. A Chapter 7 bankruptcy will typically stay on your credit report for ten years.

Tax Lien

Tax liens occur when you fail to pay your taxes. The IRS typically places a federal tax lien against your property. Unfortunately, an unpaid tax lien can stay on your credit report indefinitely (and can lead to other severe consequences, like wage garnishment).

A paid tax lien can stay on your credit report for up to seven years after it was filed. However, the credit bureaus have stopped including them on consumer credit reports at this time.

Foreclosure

A foreclosure happens when you fall seriously behind in your home mortgage payments.

The exact timeline for having the bank foreclose on your house varies depending on your loan agreement. However, it typically begins between three and six months after you started missing payments. Then, it stays on your credit report for up to seven years from the filing date.

Civil Judgment

If you’ve ever lost a civil lawsuit that resulted in you owing a debt to the plaintiff, then you probably have a civil judgment on your credit report.

A paid civil judgment can stay on your credit report for up to seven years. An unpaid civil judgment can be renewed for another seven years. In some states, it could continue being renewed indefinitely.

However, the credit bureaus have also stopped including judgments on credit reports at this time.

How do derogatory credit items affect your credit?

It’s clear that derogatory items impact your credit history, but exactly how does that happen? First, each one lowers your credit score. Just how much your credit score will drop depends on several factors.

Less severe infractions like a 30-day late payment may not cause an enormous drop. It also becomes less influential over time once you’ve repaid the debt. But major negative items can cause more significant reductions in your credit score, especially if you had a higher credit score to begin with.

Just like minor negative items, major ones won’t hurt you as much over time, especially after the first two years, but it’s still an incremental change. Although it takes just one single financial event to hurt your credit score, it can take years to repair your credit score after one or more derogatory items. That’s why making timely payments on your credit accounts is so important.

Limited Access to Credit

In addition to hurting your credit scores, derogatory marks limit your access to credit. Even if your credit scores begin to rebound a few years after the item was filed, potential lenders and credit card companies still see it listed on your credit reports.

That raises a big red flag for them because they are unsure whether you’ll be able to meet your financial commitment to them. It causes uncertainty, which is not something lenders like, especially if you have other troubling items like large amounts of debt.

Depending on various other factors in your application, you might not get approved for the loan or credit card. However, if you do get approved, derogatory items can affect the quality of your loan terms. This includes how much interest you’ll pay, how much money you can borrow, and how long you have to repay the funds.

How to Find Derogatory Marks on Your Credit Report

To find out which derogatory marks are currently active, you’ll need to order your free credit report from each of the major credit bureaus. Different creditors may only report information to certain credit bureaus, so it’s essential to get all three. The Fair Credit Reporting Act (FCRA) allows you to request a free credit report every 12 months from each credit bureau.

Once you’ve downloaded your free credit reports, scour each one carefully. Some credit bureaus help you find derogatory credit items quickly. Equifax, for example, gives a quick summary at the top of your credit report that lists “potentially negative information.”

You can use this as guidance for spotting derogatory marks. However, it’s still a good idea to look at each page individually. First, check for delinquencies under all of your accounts. Then, look at anything listed under Negative Accounts, Collections, and Public Records. This is where you’ll find judgments, bankruptcies, and tax liens listed.

How to Remove Derogatory Items from Your Credit Report

It’s possible to remove derogatory items from your credit report before they naturally age off. By law, credit reporting agencies may not list any information that is not accurate, fair, or unverified.

That’s why it’s so important to review your credit reports and make sure all the information is correct. If it’s not, you may dispute an inaccurate derogatory mark that you disagree with.

The credit bureau is required by federal law to investigate your dispute and resolve the matter within 30 to 45 days. These laws are enforced by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).

You can dispute both open and closed derogatory marks and do it either on your own or with the help of a professional. There are pros and cons associated with each method, so do your research to find which one better suits you.

Disputing a Derogatory Mark on Your Own

Perhaps the best reason to dispute negative items on your own is that it’s free. So, if you’re living paycheck to paycheck, this is your best option.

However, you need to be careful that you don’t make any mistakes that could actually end up hurting your credit score even more. For example, paying an old collection may actually renew the period it stays on your credit reports, depending on your state’s statute of limitations.

You also don’t want to offer too much information in your dispute letter. It’s the credit bureau’s job to verify the accuracy and fullness of each item. Check out our resources on dispute letters to get started on the process.

3 Steps to Removing Derogatory Marks From your Credit Report

Here’s what you need to do:

1. Request and review your credit report: Start by getting your free credit report from TransUnion, Equifax or Experian and reviewing it for any incorrect information. Pay attention to both “closed” and “open” derogatory marks.
2. Dispute derogatory marks: If you notice any errors, you can dispute them with the credit bureau. You can do this yourself or have a professional help you. The credit bureaus must respond within 30–45 days.
3. Follow up on the dispute: You may need to provide additional information or proof to back up your dispute. Make sure to respond to any inquiries within the specified timeframe.

Removing derogatory marks from your credit report can help repair your credit. However, if you’re unable to remove a derogatory mark, you’ll need to wait until it falls off of your credit report, usually within seven to ten years.

Getting a Professional to Help with Credit Report Disputes

If you can spare the relatively low cost of hiring a credit repair company to help with your disputes, it may be a worthwhile expense.

A quality credit repair firm (like the ones we’ve reviewed) typically has a decade or more of experience handling derogatory mark disputes. They know the law inside and out so that they can take the best possible approach to disputing each item.

We recommend Credit Saint. You can read our full review of them here. Beyond the technical expertise, a credit repair company also saves you the time and aggravation it takes to oversee disputes, especially if you have several.

Get a Free Consultation

Most credit repair services offer a free consultation before you sign up to use their services. It gives you a chance to review your credit history and hear their plan to fix your credit. It’s a low-pressure way to get further details about how they can help you.

No matter which route you take, you should know that bad credit is not permanent. There are plenty of ways to fix it. If you avoid any new derogatory marks, then your credit scores have nowhere to go but up. This is because as negative items age, they cause less damage to your credit.

The best way to handle these derogatory marks is to strategically dispute them and get them removed from your credit reports as soon as possible.

Request your credit reports today so that you can figure out the best game plan for your credit repair process. If you’re intimidated, contact a professional to help point you in the right direction.