In short, a ‘derogatory’ is a negative mark on your credit report. This step-by-step guide explains what may cause a derogatory to appear and how advanced credit builder software can help you get an inaccurate one removed.
Let’s begin with some derogatory basics.
What is a Derogatory?
A derogatory mark is negative by nature and typically indicates a case of financial negligence on your credit report. For instance, items such as a late payment or auto repossession could lead to a derogatory mark on your report.
How a Derogatory Mark Could Affect Your Credit
Derogatory marks are one of the biggest causes of bad credit and can do some major damage to your scores. For example, if you are applying for a new line of credit, the amount and level of derogatory items listed could negatively impact the terms and interest rates – if any, you may be offered.
What Causes a Derogatory Mark?
Any item or financial activity that lenders may view as a ‘credit risk’ runs the risk of becoming derogatory mark. With this in mind, below is a list of a common items that could lead to a derogatory mark on your credit report:
- Late payment
- Account in collection
- Any negligent or delinquent financial activity
For best credit score results, consumers should strive to avoid derogatory marks altogether. However, this may be easier said than done – especially if a derogatory is the result of an error.
Errors Could be to Blame
According to CBS News, 4 out of 5 credit reports are said to contain at least one error. In fact, 25% of credit reports may contain errors serious enough to cause some individuals to be denied credit. Eventually, errors such an inaccurate late payment or a fraudulent account, could result in derogatory mark on your credit report. Inaccuracies can take many forms and may negatively affect your credit scores if left to chance. For instance, below are several ways errors could appear on your credit report:
- Typographical mistake
- Duplicate item
- Inaccurate amount
- Item over the statute of limitations
- Mistaken Identity
- Activity or an account opened without your knowledge
How to Get an Inaccurate Derogatory Mark Removed
Getting a derogatory mark removed from your credit report may seem like a daunting task. However, if you believe a derogatory item contains an error, the ScoreShuttle software can help you begin the dispute process in a single click.
Here’s How the Dispute Process Works
First, it’s important to realize what is actually listed on your credit report. If you’re not sure where to find this information, click below for free access to your current report and credit score.
Next, review your report for any damaging items that meet the criteria of a derogatory as shown above. If you are a premium ScoreShuttle user, this part will be highlighted for your review.
If a listed derogatory item is accurate, your options for removal are fairly limited. You could ride out the ding until the statute of limitations is up – or, try to negotiate a payment in exchange for a deletion agreement with the creditor direct. In this case, the creditor will likely have the upper-hand and may or may not grant your request.
However, if you spot a derogatory that you believe is listed in error – or contains an inaccuracy of any kind, you have the option to dispute it.
How to Write a Dispute Letter
Premium ScoreShuttle users don’t need to worry about this step. Once activated, ScoreShuttle launches an automated dispute cycle to digitally challenge the item(s) with all three credit bureaus. If you do not have ScoreShuttle, you can write and send dispute letters on your own. In general, a dispute letter should contain the bureau’s address along with any evidence describing why the item should be removed from your credit report.
What Happens After a Credit Dispute is Sent?
Once your dispute is sent and received, the credit bureau(s) has 30-days to either respond or remove the item from your report. As a result, if a bureau has not responded within their allotted 30-days, then the item at stake must be taken off.
How a Derogatory Removal Could Increase Your Scores
Here’s the best part. Anytime you are able to get a derogatory mark successfully removed from your report, you could see an uptick in your credit scores. Generally speaking, the more derogatory items you are able to get removed, the higher your credit scores could go.