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Removing inaccurate derogatory marks from your credit report

by | Mar 15, 2021

In short, a ‘derogatory’ is a negative mark on your credit report. Read on to find out what may cause a derogatory to appear and what you can do to potentially remove an inaccurate derogatory mark from your credit report.

What is a derogatory mark?

When referring to credit, a derogatory mark is negative by nature and typically indicates a case of financial negligence on your report. Items such as a late payment or auto repossession could lead to a derogatory mark on your credit report.

How derogatory marks affect your credit

Derogatory marks are one of the largest causes of bad credit. For example, if you are applying for a new line of credit, the amount and severity of derogatory marks on your report could impact whether or not you receive approval (see my $0 credit score). Moreover, even if approval is granted, derogatory marks may also impact the terms and interest rate you may be offered.

What causes a derogatory mark to appear?

Any item or financial activity that lenders may view as a ‘credit risk’ could result in a derogatory mark on your report. To help you identify the credit culprit, here are some common items that may lead to a derogatory mark.

  • Late or missed payment
  • Charge offs
  • Account in collections
  • Repossession
  • Foreclosure
  • Broken lease
  • Credit inquiries
  • Bankruptcy
  • Any negligent or delinquent financial activity

How to prevent a derogatory mark from landing on your report

One of the best ways to prevent a derogatory mark from hitting your credit report is to practice responsible financial activity. This includes paying your bill on time and not biting off more than you chew when comes to using credit. As a general rule of thumb, if you can’t confidently afford your monthly payments, don’t make the purchase. However, being responsible with your finances may only be half the battle. This is because a derogatory mark could be the result of a report inaccuracy.

Inaccuracies could be to blame

Shockingly, derogatory marks may not always be your fault. Inaccuracies such as an incorrect late payment or fraudulent account could show up as a derogatory mark on your report. To find out if inaccuracies are damaging your credit, it’s wise to review your credit report on a regular basis.

Check My Credit Report For Inaccuracies

How to remove a derogatory mark from your credit report

If your credit report does contain a derogatory mark, 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 remove it.

Accurate derogatory item

If the derogatory item is accurate, your options for removal are fairly limited. One option is to ride out the ding until the statute of limitations is up. But if you want to take a more aggressive approach, here are a few other tactics to consider.

  • Write a goodwill letter. Whether you have a heartfelt story or are a first-time credit offender, a goodwill letter can help you get your story across. A letter such as this will allow you to plead your unique case to the creditor who reported the derogatory information to the bureaus. If successful, the creditor may consider removing the negative claim out of good faith.
  • Negotiate a payment for deletion agreement. Another strategy you could try is to negotiate a payment in exchange for a deletion agreement with either the lender or collection agency directly. If they agree, it’s wise to get your agreement in writing before moving forward.  Having written proof may give you some leverage if the creditor doesn’t follow through with the removal once you hold up your end of the deal.
Inaccurate derogatory item

If you believe a derogatory item on your report is inaccurate, fraudulent, or contains an error, your best removal option is to dispute it.

Disputing credit report inaccuracies

There are a few ways you can go about disputing a credit report inaccuracy. One option is to send a dispute by hand. To do this, you will need to gather the proper dispute documentation, find the correct bureau department to send it to, and mail your disputes for consideration. But if you’re not a fan of juggling paperwork, you can also file a credit dispute online. Software programs like ScoreShuttle allow you to file a credit dispute in just a few clicks. Unlike the manual option, ScoreShuttle also allows you to log in and track your dispute progress 24/7.

File a Credit Dispute

Fewer derogatory marks could lead to better credit

Here’s the best part! Anytime you successfully remove an inaccurate derogatory mark from your report, it could positively impact your creditworthiness. Generally speaking, the more derogatory items you are able to either avoid or remove, the better credit results you could achieve.

In summary

Derogatory marks can potentially crush your credit. A great baseline to derogatory prevention is to practice good financial health. But with the daily threat of report inaccuracies, paying your bills on time may not be enough. For best credit results, review your 3-bureau reports regularly. If you ever spot an inaccuracy, act quickly to dispute it.

Disclaimer: The content provided is for informational purposes only and not to give advice or guidance on credit improvement. Derogatory removal is determined by the credit bureaus or your lender and is not guaranteed. 

Liz Richards

Liz Richards

Credit Content Specialist

Liz Richards is a content creator specializing in credit wellness and best budgeting practices. As an in-house ScoreShuttle contributor, Liz transforms complex financial topics into easy-to-digest tips that consumers can use to manage their credit and financial worthiness.

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