Learn how removing derogatory marks from credit reports will affect your credit. The information in your credit files can make or break your next credit card, loan, or mortgage application.
A successful loan or credit card application will depend on a positive credit report. Negative information on your credit report can be pretty frustrating.
If you thought you had an excellent credit score and applied for a loan, and you were given an expensive loan product, or you were denied because your score had recently plummeted, you understand the frustrations of this surprise.
When you review your credit reports to determine why they dropped, you find a "derogatory" mark. You know it's not good, and all you want is for it to go away.
While everyone loves surprises, no one wants this kind of surprise. But before you pull your hair out, looking for ways to improve your score, you'll want to understand what derogatory marks are and the ways these marks can be removed from your reports.
Removing Derogatory marks From Credit Reports. What Are Derogatory Items?
The term "derogatory" shows up on your credit reports when creditors update your credit report with an adverse incident. While the causes of derogatory marks on your credit report can vary from missed payments to debt collection, or more, they all have one thing in common: they originate from not paying what you owe.
Though sometimes, they appear on your credit report by mistake. Since payment history accounts for a significant percentage of your credit report, derogatory marks can substantially negatively impact your credit score.
What Causes Derogatory Marks?
Many instances can cause a derogatory mark. They include:
Derogatory marks hang around for some time, and a derogatory mark will typically stay on your credit report for seven to ten years.
Removing Derogatory Marks From Credit Files, Why Is A Good Credit Score Important?
First, before you start removing derogatory marks from your credit, let's do a quick refresh on why a good credit score is essential. In today's world, at some point, you will find yourself wanting to borrow money to achieve your dreams.
Whether it's purchasing a car or your dream home, loans can go a long way in helping you get things you typically wouldn't with your current financial position.
Because your credit score is an indicator of your creditworthiness and trust, the better your credit score, the easier it will be to get loans and credit cards. And the better loan products and interest rates you qualify for means you'll be avoiding many headaches and saving tons of money.
Derogatory marks, which are negative indicators, lower your score and hinder this!
Luckily, it's possible to remove derogatory marks from your credit report before the 7 or 10 years. It's wise to get rid of these marks from your credit files, especially if you're trying to improve your credit score for a car loan or mortgage.
So, how do you go about removing derogatory marks from credit?
Do you have derogatory items on your credit report? Whether you're dealing with foreclosure, tax liens, or late payments, the following six strategies will help get them removed and clean up your credit report.
1. Review Your Credit Reports
Did you know that there's a high chance that derogatory marks in your credit could result from errors? According to a survey conducted by the Federal Trade Commission, one in five Americans has at least one error on their credit reports.
For this reason, the first thing you want to do when looking to remove derogatory items from your credit is to review tour credit reports.
Pull your credit reports from all three major credit bureaus and comb through every detail to check that the information listed in your credit report is accurate.
Every time you encounter an error, note the mistake and the correct value or info, then proceed to the next step – filling a dispute with the credit bureau. The sooner you know where you stand, the sooner you can work towards removing derogatory marks from credit.
2. Submit A Dispute With The Credit Reporting Agency
Under federal law, consumers can dispute any information on their credit files that is incomplete or inaccurate. Check the following information to make sure it's accurate:
Does your late payment account list an incorrect balance? You can challenge it! If your credit report's information is not confirmed by your creditor on time – usually 30 days – it must be removed from your credit report.
You can submit a dispute with credit bureaus online or write a dispute letter. Make sure to explain everything you have found in detail and attach copies of any proof you have collected.
3. Talk With Creditor Regarding "Pay For Delete."
Creditors and collection agencies who report your credit information to credit bureaus can correct or withdraw it. You can write a letter to your creditor requesting "pay for delete." In the pay for delete negotiation, you pay your account in full to have your creditor remove the negative details from your credit report. Some creditors might take you up on the offer; others won't.
4. Write A Goodwill Letter Requesting Deletion
Suppose the derogatory mark on your credit report is accurate, and you've already settled the account. In that case, your next step should be to write a goodwill letter to the creditor or collection agency requesting they remove the negative item from your credit report.
Note that creditors don't have to comply with your request. But goodwill letters still work, and some creditors will make these deletions.
5. Have Credit Repair Professionals Remove The Derogatory Mark
If you are the type of person who would rather avoid all the headaches involved in reviewing your credit, disputing errors, and negotiating with credit bureaus and creditors, check out reputable professional credit repair companies.
Let professionals help you out, and honestly, they are in a better position to get negative stuff removed from your credit report a lot quicker.
6. When Removing Derogatory Marks From Credit - Wait It Out
If all else fails, you have no choice but to wait it out. These marks eventually fall off your credit report. Fortunately, derogatory marks have an expiry date, and as
they get older, the less impact they have on your credit score. The other good news is that you can work on improving your credit score with positive information during this time – credit repair services can also help with that.
A derogatory mark on your credit report can have devastating consequences. Taking a moment to understand it and strategies for removing derogatory marks from credit can raise your credit score and strengthen your approval odds for credit.