August 24, 2023 |5 min read
A derogatory mark or remark on your credit reports is a negative item, such as a late payment or foreclosure. If a derogatory mark is listed on your credit reports, it can hurt your credit scores and may affect your chances of qualifying for credit cards and loans. While derogatory marks can stay on your credit reports for up to seven to 10 years, depending on the type of mark, their impact could diminish over time.
Consistent, responsible credit use, such as making on-time payments, could help you rebuild your credit. You can also review your credit reports for errors and dispute any incorrectly reported derogatory marks, which might improve your credit. Read on for more information about what derogatory marks are and how to rebuild credit after receiving one.
Key takeaways
- Derogatory marks on credit reports are negative items like missed payments, bankruptcies or foreclosures.
- Late or missed payments are typically reported to the credit bureaus when they’re at least 30 days past due. And the later they are, the more damage they can do to your credit.
- Derogatory marks can harm your credit, though their effect will generally diminish over time—as long as there are no additional derogatory marks.
- You can start to rebuild your credit after a derogatory mark with responsible use by making payments on time, keeping a low credit utilization ratio and more.
Monitor your credit for free
Join the millions using CreditWise from Capital One.
Sign up today
What is a derogatory mark?
A derogatory mark is a negative item on credit reports. These are typically items that are a credit risk, like bankruptcy. They can hurt your credit scores and may also affect your ability to qualify for different types of credit.
Different types of derogatory marks
Derogatory marks likely will have a negative impact on your credit scores. But the exact effect of a new derogatory mark on your credit scores can depend on other information in your credit file.
In general, people who already have a good or excellent credit score may experience a larger score drop from negative information than someone who has a bad credit score.
Here are examples of some of the common derogatory marks and what can cause them:
- Late payments typically appear on credit reports when an account is 30 days or more past due.
- Charge-offs happen when a creditor considers a debt a loss and closes an account, which generally occurs if an account is 180 days past due.
- Repossession might occur if you fail to make loan payments on an auto loan or other loan secured by collateral and the creditor takes possession of the property due to nonpayment.
- A foreclosure could be the result of not making mortgage payments—typically for a few months—and the lender taking ownership of the property.
- Filing for bankruptcy is a legal proceeding that often occurs as a last resort for individuals whoget behind on debt. Individuals can file for Chapter 7 or Chapter 13 bankruptcy.
Most of these derogatory marks will fall off your credit reports after seven years, according to credit-scoring company FICO®. However, Chapter 7 bankruptcies can stay for up to 10 years.
Derogatory marks won’t hurt your credit forever, though. The impact on your credit scores from a derogatory mark can diminish as time goes on, and responsible credit usage could help your scores.
How to get derogatory marks removed from your credit report
If the derogatory marks on your credit report are accurate, they generally won’t fall off for up to seven to 10 years. But if you think there may be a mistake or an inaccuracy on your credit report, the Consumer Financial Protection Bureau (CFPB) recommends taking the following steps to resolve it:
- Contact the credit bureaus to alert them of the error.
- Provide a written explanation of why you feel the entry may be wrong.
- Share any supporting documentation you may have.
Once you’ve submitted your dispute, the CFPB says that the credit bureaus are required to investigate your claim. If the credit bureaus determine there’s an error, they must report back to you. But the CFPB also notes that the bureaus can choose not to investigate the dispute if they determine your claim is inaccurate. In that case, the CFPB says that the bureaus are required to notify you within five days.
How derogatory marks can impact future finances
Derogatory marks on your credit reports can make it more difficult to be approved for credit cards, loans and other financing. These negative marks can also lead to less favorable lending terms, such as higher interest rates or additional fees.
Rebuilding your credit after derogatory marks
While rebuilding credit can take time, you don’t have to sit around and wait. You can take an active approach to rebuilding your credit through responsible credit use. For instance, payment history is a major credit-scoring factor for both credit-scoring companies FICO and VantageScore®. So consistently making on-time payments as you move forward can help.
Paying attention to your credit utilization—or how much of your available credit you’re using—can also help. Credit experts typically recommend keeping your credit utilization below 30%. You can get insight about your credit utilization with CreditWise from Capital One. CreditWise is free and available to everyone—even if you don’t have a Capital One credit card.
Derogatory marks on your credit report in a nutshell
Derogatory marks are negative items on credit reports. And they’re one of the reasons credit scores drop. Their effects can diminish over time. But trying to rebuild your credit takes consistent, responsible credit use.
One way to track your progress is by checking your credit reports and credit scores. You can do that with CreditWise from Capital One. You can also get free copies of your credit reports from the three major credit bureaus. Visit AnnualCreditReport.com or call 877-322-8228 to learn more.
