Derogatory Marks on Your Credit: Most times this has happened to us one way or the other. We forgot to make the credit card payment; or financial difficulty that made it temporarily impossible to pay all of our bills on time. Credit card mistakes will stay on your credit report for up to seven years.
The good news is that eventually even the worst of your credit mistakes drop off your credit report. The bad news is that depending on the situation, it can take a while. So, how long do derogatory marks stay on your credit report? Different derogatory marks differs in amount of years it sticks on your credit report. Read on.
Derogatory Marks Definition
Derogatory marks are negative, long-lasting indications on your credit reports that generally mean you didn’t pay back a loan as agreed. For example, a late payment or bankruptcy appears on your reports as a derogatory mark. They stay in your credit card up to 7 or 10 years and damage your scores.
If you have a lower score coupled with a derogatory mark, you may have a hard time getting approved for credit or may get less-than-ideal credit terms. But the good news is that the impact to your credit of all derogatory marks decreases over time.
You get derogatory remarks; if a creditor or lender report negative information to the credit bureaus, which is then translated into a derogatory mark. Or the credit bureaus can add public records to your credit reports. These may include bankruptcies, civil judgments and tax liens.
List of Derogatory Marks
Here’s how long various negative marks stay on your credit report:
Missed payments: seven years.
Account charge off: seven years.
Repossession: seven years.
Collections accounts: seven years.
Late student loan payment: seven years.
Chapter 7 bankruptcy: 10 years.
Chapter 13 bankruptcy: seven years.
Foreclosure: seven years.
If you are at least 30 days late, expect a mark on your credit record. Missed payments typically stay on your credit reports for seven years. The later the payment, the greater the damage to your credit scores.
What to do: Pay up as soon as you can. If you’ve never or rarely been late before, you might be able to get the creditor to drop the late fee. Call the customer service number, explain your oversight and ask if the fee can be removed.
If you don’t pay your debt as agreed, your lender may eventually give up and charge the account off. The charge-off will appear on your credit reports for seven years.
If you don’t pay for an item, such as a car, as agreed, the lender can come and get it, often without warning. Repossession will stay on your credit reports for seven years after the account was first reported late.
What to do: Keep all other bills up to date. Positive information such as on-time payments, along with the passage of time, can start to mitigate the damage to your credit.
A creditor that’s not seeing payment may send or sell the debt to a debt collector. Having an account in collections is a serious negative that stays on your credit reports for seven years.
What to do: Make a plan to pay off the collection once you verify that the collection agency actually owns the debt. That won’t get the mark off your credit reports, but it’ll remove the risk you could be sued.
What to do: If you’ve paid late but haven’t defaulted, consider switching to an income-driven repayment plan, putting your loan in deferment or forbearance, or asking your lender for a modified payment plan.
If you’ve defaulted on your federal student loans, the government offers three options: Repayment, rehabilitation and consolidation.
How long a personal bankruptcy stays on your credit reports depends on which type you file.A Chapter 7 bankruptcy will stay on your reports for 10 years. Chapter 13 bankruptcy sticks around for seven years.
What to do: Begin to reestablish credit. A secured credit card or a credit-builder loan can help people build credit when they can’t qualify for unsecured credit. And note that credit scores can rebound from bankruptcy sooner than you may think.
If you fail to make payments on your home and the bank seizes it, the foreclosure will be reported to the credit bureaus and the mark will stay on your credit reports for seven years.
What to do: Keep your other credit lines open and pay them on time. You want to build up all the positive payment information you can. Note that the waiting period after foreclosure is shorter than in the past, so keep polishing your credit and you could re-enter the housing market sooner than you expected.
How to Deal With it
You can’t deal with a derogatory mark if you don’t know about it. Here are steps you can take if you have a derogatory mark on your credit reports.
Review Your Credit Reports
Your credits reports may show “closed” and “open” derogatory marks. Closed derogatory marks refer to negative items about closed accounts, such as those in collections, including accounts that have been charged off.
An open derogatory mark refers to negative information about an open account, such as your current credit cards or loans.
Make sure all of the information on the reports is accurate, including your personal information, open and closed accounts, and negative information. Check for delinquent payments under all your accounts, and then look for public records and accounts in collections.
Dispute Incorrect Derogatory Marks
If you have a derogatory mark on your TransUnion credit report and it’s an error, you can file a dispute using Credit Karma’s free Direct Dispute™ tool. The credit bureaus are required to investigate disputes related to trade lines within 30 days of the filing date.
Start Healing Your Credit
Even if the derogatory mark is legitimate, you can start improving your credit. Make payments on any accounts that are past-due, and then consistently make the minimum payment on time. Keep your account balances low and only apply for new credit that you need.
And think twice before you ignore the problem. In some cases, such as with tax liens, ignoring the debt can lead to more problems, like wage garnishment — so it’s important to address your debt.
Wait for the Marks to Fall off Your Reports
Sometimes all you can do is wait. Fortunately, about two years after a derogatory mark appears on your reports, your credit should start rebounding — if you’re taking the right steps toward healthy credit.
If you’re working on building credit, you may consider getting a secured credit card, which is made specifically to help people with that process.
Having a derogatory mark on your credit reports remains there for several years and can damage your scores. But you can be proactive about making healthy credit moves.
Check your credit reports regularly, question and dispute errors on the reports, start rebuilding your credit and then let time take care of those derogatory marks.