A derogatory remark on a consumer credit report is a negative item that can negatively impact a person’s credit score and creditworthiness. Some common examples of derogatory remarks include late payments, charge-offs, collections, foreclosures, repossessions, and bankruptcy. These remarks can stay on a person’s credit report for up to seven years, and can make it difficult for the person to obtain new credit, a loan, or even a job.
Reasons for derogatory remarks on a credit report can be due to a variety of factors, including financial hardship, unemployment, divorce, medical bills, and simply not keeping track of payments. It is important for consumers to understand that credit reports are not only based on a person’s credit history, but also on their payment history, which is why late payments and other negative items can have such a damaging impact.
There are several types of derogatory remarks that can appear on a credit report, including:
- Late payments: Late payments occur when a person fails to make the minimum payment on a loan or credit card by the due date. Late payments can have a major impact on a person’s credit score, especially if they are repeated or are more than 30 days past due.
- Charge-offs: A charge-off occurs when a lender declares a debt as uncollectible. This can happen if a person is behind on payments for an extended period of time, and the lender decides to write off the debt as a loss.
- Collections: Collections occur when a debt is sent to a collection agency for recovery. The collection agency will then attempt to collect the debt, and will report the collection to the credit bureaus, which will appear as a derogatory remark on the person’s credit report.
- Foreclosures: A foreclosure is a legal process that occurs when a person is unable to make the payments on their mortgage, and the lender takes possession of the property. Foreclosures can have a major impact on a person’s credit score, as they are considered a severe derogatory remark.
- Repossessions: Repossession occurs when a lender takes back property, such as a car, that was used as collateral for a loan. Repossessions can also have a major impact on a person’s credit score.
- Bankruptcy: Bankruptcy is a legal process that allows a person to discharge their debts, but it can also have a major impact on a person’s credit score. Bankruptcies can stay on a person’s credit report for up to 10 years.
If a consumer finds derogatory remarks on their credit report, it is important that they take action to dispute the information and have it corrected, if necessary. The following are steps a consumer can take to dispute derogatory remarks on their credit report:
- Review the credit report: The first step in disputing derogatory remarks is to obtain a copy of the consumer’s credit report and carefully review it for accuracy.
- Gather documentation: If a consumer believes that a derogatory remark is inaccurate, they should gather documentation, such as receipts, bank statements, and bills, to support their dispute.
- Contact the credit bureau: The consumer should contact the credit bureau that is reporting the derogatory remark and dispute the information in writing. The consumer should provide a detailed explanation of why they believe the information is incorrect, and provide any supporting documentation.
- Contact the creditor: The consumer should also contact the creditor that is reporting the derogatory remark and dispute the information with them in writing. The consumer should provide a detailed explanation of why they believe the information is incorrect, and provide any supporting documentation.
- Wait for a response: After disputing the information with the credit bureau and creditor, the consumer should wait for a response. The credit bureau has a legal obligation to investigate the dispute within a reasonable amount of time, and to either verify the accuracy of the information or remove it from the credit report if it is found to be inaccurate.
- Follow up: If the derogatory remark is not removed from the credit report, the consumer should follow up with the credit bureau and creditor. If necessary, the consumer can also seek the assistance of a credit repair organization or an attorney.
- Monitor the credit report: The consumer should regularly monitor their credit report to ensure that the derogatory remark has been removed and that their credit score has improved.
- In conclusion, derogatory remarks on a consumer credit report can have a major impact on a person’s credit score and creditworthiness. It is important for consumers to understand the reasons for these remarks and the types of derogatory remarks that can appear on a credit report. If a consumer finds derogatory remarks on their credit report, they should take action to dispute the information and have it corrected, if necessary. By following these steps and regularly monitoring their credit report, consumers can improve their credit score and regain control of their financial future.