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How to Remove Derogatory Marks from Your Credit Report

Time for Your Financial Literacy Check-up BlogMay 2019

If you’re in the market for an auto loan, home loan or credit card, rest assured your personal credit report will be reviewed by the lender to decide if they wish to loan to you.

Knowing your credit score is a great first step before applying for a loan or new line of credit. But, you’ll also want to scour your credit report in greater detail to see if you have any adverse payment history – including collections activity.

Having collections activity on your account is obviously a red flag to other lenders. It illustrates you’ve failed to pay back a lender, so others may be hesitant to make that same mistake. However, there are ways to remove derogatory marks from your credit report.

What types of accounts are reportable for collections?

As you review your credit report, you’ll find a wide variety of accounts that could have derogatory marks if you’ve failed to make on-time payments. These accounts include:

  • Credit cards
  • Home loans/rental payments
  • Car loans
  • Utility bills
  • Cell phone bills
  • Student loans
  • Medical debt
  • Government agencies (IRS, courts, child support)

If you believe any derogatory marks have been made to your file by mistake, start by reaching out to the respective lender to flag the error. You can also contact the credit bureaus directly and file a dispute. Contacting them online to file a dispute is usually the quickest option. You will need to provide details on why you believe the information is wrong, offer supporting documentation and of course request the information be removed.

If the derogatory activity is accurate, your other option is to contact the lenders directly and ask for the derogatory marks to be removed. The lenders will want to be paid, so you’ll need to negotiate. You don’t necessarily want to start an all-new payment plan, which restarts the clock on the debt being on your file. So instead, pay the debt off in its entirety, or agree to a settlement, a smaller, one-time payment. Remember to ask for the derogatory marks to be removed from your account entirely, so that there is no record of it. While showing a zero balance is great, showing no collections activity is even better.

Another option is to contact a credit repair company and have them do the negotiating on your behalf.

Finally, if the collections activity is nearing the seven-year mark, you might opt to wait it out. If the derogatory marks are more than seven years old, credit bureaus must remove them by law.

It takes time to navigate this work and get the derogatory activity removed, so give yourself ample time before you start shopping for new credit. And remember, once you have a clean file, keep it that way. Pay your bills on time and continue to monitor your credit report to ensure no errors surface in the future.

Tip: Remember your credit score and report can look slightly different for each of the primary credit bureaus (Equifax, Experian and Transunion), so check all three. You can receive a free credit report from each bureau once a year by visiting annualcreditreport.com. These reports will show your credit history in detail. You usually need to pay a fee to receive the actual credit score.

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