In short, a ‘derogatory’ is a negative mark on your credit report. This easy guide explains what may cause a derogatory to appear and how you can use advanced credit builder software to help you remove an inaccurate one. Let’s begin with some derogatory basics.

What is a Derogatory?

A derogatory 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 item on your report.

How Derogatory Marks 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?

Any item or financial activity that lenders may view as a ‘credit risk’ could result in a derogatory mark on your report. With this in mind, below is a list of a common items that may lead to a derogatory.

  • Late payment
  • Account in collection
  • Repossession
  • Foreclosure
  • Bankruptcy
  • 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 contains an error.

Errors Could be to Blame

According to CBS News, 4 out of 5 credit reports 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 as an inaccurate late payment or 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.

  • Duplicate item
  • Typographical mistake
  • Inaccurate amount
  • Item over the statute of limitations
  • Mistaken identity
  • Fraud
  • Activity or an account opened without your knowledge

Find out What’s on Your Credit Report

Are derogatory marks impacting your creditworthiness?  What about report errors?  If you’re not sure, click below to get started with your $0 credit score now.

Removing a Derogatory Mark From Your Credit Report

If your credit report contains a derogatory, take a closer look to determine whether or not the item is accurate.  Depending on the legitimacy of the item, below are some options to possibly get it removed.

  • Accurate Derogatory Items – If the derogatory item is accurate, your options for removal are fairly limited. One option is to write a goodwill request to correct the issue and explain the circumstance that may have led to the discrepancy. Another is to try to negotiate a payment in exchange for a deletion agreement with the creditor directly. Either option could be worth a try. However, the creditor will likely have the upper hand and may or may not grant your request.
  • Inaccurate Derogatory Items – If you believe a derogatory item is fraudulent, inaccurate, or contains an error, your best removal option is to dispute it.

How the Dispute Process Works

When it comes to your credit, disputing is the act of challenging errors that may be listed on your report.  In general, the goal of disputing is to ideally fix or remove any derogatory information that you believe is inaccurate. The dispute process works in the following three phases.

1. Dispute – To begin a dispute, create and send a dispute letter to the affected credit bureau(s). Keep in mind that credit information can fluctuate from one bureau to the next. Thus, it’s important to review your credit reports from Experian, TransUnion, and Equifax.

2. Review   Once received, the credit bureaus will review your dispute to determine the next steps.

3. Respond or Remove – By law, once your dispute is received, the credit bureaus have 30-days to either respond or remove the item from your credit report. Furthermore, if your dispute results in derogatory removal, you could see an uptick in your credit scores!

Manual vs. Digital Disputing 

The dispute process above can be performed manually by collecting the proper documentation and sending your disputes by hand. But numerous trips to the post office and juggling several credit bureaus at once waste time and can feel confusing. Alternatively, the fastest, easiest way to dispute a report issue is online.  If you’d prefer the digital route, you can use advanced credit builder software like ScoreShuttle to review your 3-bureau credit reports and dispute errors in a single click. If you choose this option, you will launch ScoreShuttle’s automated cycle to dispute the item(s) with all affected credit bureaus. For more information on how to access ScoreShuttle’s online disputing tool, click below to get started.

Fewer Derogatory Marks Could Lead to Higher Scores

All things considered, here’s the best part! Anytime you experience a derogatory removal, you could see an increase in your credit scores. Generally speaking, the more derogatory items you are able to avoid and/or remove, the higher your credit scores could go.

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