How Long Does a Derogatory Mark Stay on Your Credit Report?

Having a derogatory mark on your credit report can be frustrating These negative items like collections, late payments, and bankruptcies can make it difficult to get approved for new credit So how long do you have to deal with the effects of a derogatory mark on your credit history?

In this article, we’ll explain what derogatory marks are, how long they can stay on your credit reports, and what you can do about them.

What is a Derogatory Mark?

A derogatory mark is a negative item or remark on your credit report Common derogatory marks include

• Late payments
• Collections accounts
• Charge-offs
• Bankruptcies
• Foreclosures
• Repossessions
• Debt settlements
• Student loan delinquency

These items indicate you’ve struggled with managing debt or making payments on time. Derogatory marks lower your credit scores, making it harder to qualify for new credit or get approved at favorable interest rates.

How Long Do Derogatory Marks Stay on Your Credit Report?

Most derogatory marks can stay on your credit report for up to 7 years from the date of first delinquency. However, bankruptcies can remain for up to 10 years depending on the type. Here’s a breakdown of how long different derogatory marks typically remain:

• Late Payments: 7.5 years
• Collections Accounts: 7 years
• Charge-Offs: 7 years
• Repossessions: 7 years
• Foreclosures: 7 years
• Student Loan Delinquency/Default: 7 years
• Chapter 13 Bankruptcy: 7 years
• Chapter 7 Bankruptcy: 10 years

The clock starts ticking from the date of your first missed or late payment, not when the account goes to collections or is charged off.

For example, if you miss a credit card payment in January 2020 and the account is charged off and sold to collections in 2021, the 7 years would start in January 2020. The derogatory mark could remain until January 2027.

How Derogatory Marks Affect Your Credit

Derogatory marks can seriously drag down your credit, especially if you have limited or poor credit history otherwise. Things that influence how much a derogatory mark hurts your credit include:

• Type of Derogatory Mark: Severe marks like bankruptcies and foreclosures hurt more than small dings like a single late payment.

• Age of the Derogatory Mark: More recent marks hurt your credit more than older ones.

• Credit History: If you have a short credit history, marks have a greater impact versus someone with a long established history.

• Other Factors: Credit mix, hard inquiries, and your overall utilization rate also play a role.

While derogatory marks definitely damage your credit, the impact lessens over time. And you can take steps to rebuild credit even with negative marks on your history.

Removing Derogatory Marks from Your Credit Report

You have a few options if you want to remove a derogatory mark from your credit reports:

• Dispute Inaccurate Information: If a mark is inaccurate or doesn’t belong to you, file a dispute with the credit bureaus. Provide evidence it’s an error.

• Negotiate with Creditors: You may be able to negotiate with the creditor or collection agency to remove the derogatory mark in exchange for payment or agreeing to a payment plan.

• Write Goodwill Letters: Write the creditor a goodwill letter explaining the situation and asking them to remove the negative mark.

• Wait it Out: Most derogatory marks fall off your credit reports after 7 years (or 10 years for bankruptcies).

• Improve Other Credit Factors: Focus on improving your credit mix, lowering balances, and making on-time payments. This helps offset the damage.

Strategies for Rebuilding Credit with Derogatory Marks

Don’t lose hope if you have negative information on your credit reports. Here are some tips for rebuilding credit even with derogatory marks:

• Make all current payments on time. On-time payment history is a major factor in credit scores.

• Keep credit card balances low. High balances hurt your credit utilization rate.

• Become an authorized user on someone else’s account. It can help establish positive history.

• Open a credit builder loan or secured credit card. Makes payments to build credit from scratch.

• Wait for time to pass. Negative marks hurt less with age.

• Limit new credit applications. Too many hard inquiries also ding your scores.

With a smart credit-building strategy, you can rebuild and raise your credit scores over time even with some bumps in your history. Monitor your credit reports so you know where you stand. Be patient, and focus on demonstrating responsible credit management going forward.

The Bottom Line

Having derogatory marks like collections, charge-offs, and bankruptcies on your credit reports is frustrating. But take heart knowing the effects are temporary, and you can recover with time and effort.

Most negative marks stay on your credit reports for 7 years, although bankruptcies can linger for 10. Continue making on-time payments, keep balances low, and limit new credit applications. With diligence, you can rebuild credit even with some dings.