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Reviewed By:
Ashley Davison
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world every...
A derogatory mark is negative information on your credit report that shows you didn’t pay a debt as agreed, such as a late payment, collection, charge-off, repossession, foreclosure or bankruptcy. Most derogatory marks can stay on your report for up to seven years, and a Chapter 7 bankruptcy for up to ten.
This guide explains what derogatory means on a credit report, each type of mark, how long each one stays and how much it can affect your scores. It also covers what to do if a mark is inaccurate. You can check your own reports from all three bureaus for free at AnnualCreditReport.com.
Key Takeaways
Derogatory marks include late payments, collections, charge-offs, repossessions, foreclosures and bankruptcies.
On a credit report, “derogatory” means negative. It’s the label for information that shows a debt wasn’t paid as agreed. An account with that kind of information is often called a derogatory account. Lenders may define the term a little differently, Experian notes, but these are the most common types:
Collections. An unpaid debt sent to a collection agency or the creditor’s own collection department. Learn more about collections on your credit report.
Charge-offs. When a creditor writes off an unpaid debt as a loss, usually after several months of missed payments. You may still owe the balance. See what a charge-off is.
Repossessions. When a lender takes back a car or other property after missed payments, including a voluntary surrender.
Foreclosures. When a mortgage lender takes back a home after missed payments.
Bankruptcies. A Chapter 7 or Chapter 13 filing. Bankruptcy is the only public record that appears on credit reports, according to Experian.
How Long Do Derogatory Marks Stay on Your Credit Report?
The start date matters. For collections and charge-offs, the law starts the seven years 180 days after “the commencement of the delinquency which immediately preceded the collection activity” or charge-off. The law allows any bankruptcy to be reported for up to 10 years, and the bureaus remove a Chapter 13 after 7.
These limits don’t apply to reports pulled for a loan or life insurance policy of $150,000 or more, or a job paying $75,000 or more a year. Our guide to the 7-year rule goes deeper on timing.
How Much Does a Derogatory Mark Affect Your Credit?
It can matter a lot, because payment history is the biggest factor in your scores. It makes up 35% of a FICO Score, according to myFICO.
How much one mark hurts depends on the rest of your report. A single late payment usually matters less than a charge-off, collection or bankruptcy.
Mistakes do happen. In a 2013 FTC study, one in five consumers had an error that was corrected by a credit reporting agency after it was disputed, on at least one of their three credit reports. Check each mark for:
Accounts that aren’t yours, or the same debt listed more than once
Late payments you made on time
Wrong balances, dates or account status, such as a paid account still showing a balance
Delinquency dates that look wrong or appear to have been reset
Marks older than the reporting period allows
If you find an error, dispute it with the credit bureau and with the company that reported it. Under the credit report dispute law, the bureau generally has 30 days to investigate.
Disputing is free, and you can do it yourself. If that’s more than you have time for, a reputable credit repair company can handle disputes of items you believe are inaccurate.
Paying can still matter, because some newer scoring models treat paid collections differently. FICO says FICO Score 9 disregards all paid collection accounts. Lenders choose which score to use, so the same mark can count differently from one application to the next.
Keep card balances low. Amounts owed make up 30% of a FICO Score, according to myFICO.
Bring past-due accounts current if you can. An account that’s still delinquent can keep adding late payments.
Keep checking your reports. Make sure each mark drops off when its reporting period ends and that paid accounts show as paid.
A derogatory mark can also come up outside of loans. Landlords may check your credit, and Experian says derogatory items may mean a larger security deposit for a cellphone or other service account. See how to get an apartment with bad credit.
Are Tax Liens and Civil Judgments Still Derogatory Marks?
They can still show up in public court records that some lenders or landlords check. If you see one on your credit report, it shouldn’t be there, so dispute it. Our guide to public records on your credit report covers this in more detail.
It depends on the mark and the rest of your report. A single derogatory mark can lower your scores, especially a recent or serious one. Its effect usually fades as it ages and you build a record of on-time payments.
It’s an account on your credit report with negative information, such as late payments, a collection, a charge-off, a repossession or a foreclosure. The account can stay on your report as derogatory even after it’s paid or closed, until its reporting period ends.
Only if it’s inaccurate, incomplete or can’t be verified. Then you can dispute it with the credit bureaus and the company that reported it. Accurate marks generally stay until their reporting period ends.
A derogatory mark is any negative entry that shows a debt wasn’t paid as agreed. Most stay for up to seven years, Chapter 7 bankruptcy for ten, and their effect on your scores fades over time.
Paying one doesn’t remove it. Accurate marks stay, but you have the right to dispute anything that’s wrong, and on-time payments help you rebuild while old marks age off.
Reviewed By:
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world everything she knows and learn everything that she doesn’t! Ashley is a FICO® certified professional, a Board Certified Credit Consultant, a Certified Credit Score Consultant with the Credit Consultants Association of America, UDAAP certified, and holds a Fair Credit Reporting Act (FCRA) Compliance Certificate.
