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A derogatory mark on your credit report can make getting approved for new credit challenging. From late payments to bankruptcies, derogatory marks may stay on your credit for up to 7 years — or sometimes 10 years for certain types of bankruptcies.
Sometimes the only thing you can do to get a derogatory mark off your credit report is wait. But if the derogatory mark is in error or you can negotiate with the creditor, you may have options for removing it from your credit report sooner. And in any case, you can still do other things to improve your credit, so any derogatory marks have less impact on your credit with time.
Let’s look at derogatory marks, how they affect your credit, and what you can do to get past them.
Derogatory marks are negative entries on your credit report that can stay on your credit report for up to 7 or 10 years.
These negative entries indicate you have struggled to pay your creditors on time and may not have managed your credit responsibly. Generally, a derogatory mark hurts your credit, making getting approved for credit products with good terms (or at all) difficult.
Some examples of derogatory marks on your credit report include:
Creditors may report negative entries to the credit bureaus, or credit bureaus may add public records such as bankruptcies and tax liens to your credit report.
Any derogatory mark can drag down your credit score, but how much it hurts your credit depends on various factors, such as how severe the negative entry is, how long it’s been on your credit, and what the rest of your credit report looks like.
For example, a derogatory mark from a late payment is far less severe than a foreclosure or bankruptcy. And a derogatory mark that’s just a few months old will hurt your credit more than a years-old entry.
Payment history is the most critical factor in FICO and VantageScore credit scores. A derogatory mark from late payments, collections accounts, charged-off accounts, and other non-payment issues can hurt your credit score.
If your credit history is generally good, your positive payment history, low credit utilization, and other factors may help support your credit rating so a derogatory mark doesn’t hurt as much as it would if you have multiple negative entries or a history of struggling with credit.
What you should do to improve your credit after a derogatory mark depends on the negative entry. For example, if it’s a late payment, get your account current as soon as possible. An account in collections or a charge-off requires a payment — and you may be able to negotiate the removal of the negative mark from your credit report in the process.
For more severe derogatory marks, such as repossession, foreclosure, or bankruptcy, it may be best to focus on improving other areas of your credit, such as making on-time payments or having a low credit utilization ratio, to reestablish yourself as a responsible borrower.
Even if you don’t get a derogatory mark removed from your credit report, it will hurt your credit less over time. That’s especially true if you improve your credit habits and establish a history of on-time payments and a low credit utilization ratio. Eventually, your good credit habits can start to outweigh your bad credit history.
If it’s been 7 years since the date of first delinquency on an account and it’s still on your credit report, you should file a dispute to remove it from your credit report.
Hot Tip:See our guide to learn about 10 ways to improve your credit score.
You can see derogatory marks when you check your credit report. Every week, you can get a free credit report from the 3 major credit bureaus of Equifax, Experian, and TransUnion from AnnualCreditReport.com.
You can also contact the credit bureaus through their respective websites or by phone, but you may have to pay if you order a credit report directly from the credit bureaus:
Additionally, some websites such as Credit Karma, Credit Sesame, and Chase Credit Journey allow you to access your credit report and credit score for free.
Once you’ve obtained your credit report, you can review it to find derogatory marks such as late payments and collections accounts.
If you don’t want to check your credit report frequently, you can sign up for credit report monitoring. For example, Credit Karma offers free credit monitoring so you can get credit alerts when there’s a change to your credit report.
Generally, derogatory marks stay on your credit report for up to 7 years from the date of first delinquency. Bankruptcies stay on your credit report for 7 to 10 years, depending on the type of bankruptcy.
Remember that the clock starts when your account first becomes delinquent, not when it goes to collections. For example, suppose you’re late making a credit card payment, and it becomes so late that it’s charged off and sent to collections. In that case, the account may stay on your credit report as a derogatory mark for up to 7 years from the date of the first late payment, not when it was sold to a debt collector.
Bankruptcies are a bit different. While the accounts that may have led to your bankruptcy will remain for up to 7 years from the initial delinquency, bankruptcy will be on your credit for up to 7 or 10 years from the date the bankruptcy was filed.
How long a bankruptcy stays on your credit depends on the type of bankruptcy you file. A Chapter 7 bankruptcy can stay on your credit for up to 10 years, while a Chapter 13 bankruptcy can stay up to 7 years.
While 7 or 10 years may sound like a long time, the effect of derogatory marks on your credit report tends to lessen over time. Generally, the longer a derogatory mark is on your credit report, the less effect it has on your credit score.
Some derogatory marks may fall off your credit report before 7 years, especially if it’s a collection account you’ve paid off or negotiated to remove the account.
There are a few ways to remove derogatory marks from your credit report, including:
Derogatory marks and collections are related but aren’t quite the same. While collections accounts are a type of derogatory mark, not all derogatory marks are collection accounts.
In addition to collection accounts, you could have late payments, charged-off accounts, bankruptcy, foreclosure, tax liens, or other derogatory marks on your credit report. These derogatory marks typically stem from non-payment on accounts, but the account may or may not have gone to collections.
Collection accounts are a specific type of derogatory mark that indicates an account has been sent to a debt collection agency, usually for failing to pay a debt. The debt collection agency then attempts to collect payment on the debt.
Derogatory marks may not disappear from your credit report once paid, but their impact on your credit score is typically reduced over time.
When a derogatory mark is paid, it may be updated on your credit report to show that it has been satisfied or paid in full. However, it will not be removed from your credit report immediately. Most derogatory marks can remain on your credit report for up to 7 years, even after the accounts have been paid.
Paying off a derogatory mark can still be beneficial because it shows that you have taken responsibility for your debts and are working to improve your credit standing. In addition, as time goes on and the derogatory mark becomes older, its impact on your credit score will lessen.
With some debt collectors, you may be able to negotiate a “pay for delete” agreement. In this arrangement, the debt collector agrees to remove the collection account from your credit report in exchange for payment, usually in full or for a negotiated rate.
If you’ve paid off a collection account, check your credit report to verify the account has been updated to reflect you’ve paid it.
Generally, yes, you should pay off derogatory accounts if you can. Paying off a derogatory account may improve your credit score, and creditors like to see that you’ve paid your debts — even if you got behind in the past. With paid-off accounts, getting approved for new credit should be easier.
Paying off a derogatory account can also keep you out of legal trouble. Creditors or debt collectors may sue you to collect your debts. You could face wage garnishment, property liens, and other consequences if they get a judgment.
You’ll also save on interest and fees, which creditors and debt collectors often charge on outstanding payments.
You may relieve stress by paying off derogatory accounts, too. Collection calls for the debt should stop, and you won’t have to worry about letters or potential lawsuits once you’ve satisfied the debt.
However, if you cannot pay off derogatory accounts, you may not want to stretch too hard to make that happen. If you’re struggling with debt and paying off derogatory accounts would strain your everyday budget, you might benefit from getting help from a nonprofit credit counselor or bankruptcy attorney instead.
Derogatory marks can stay on your credit report for up to 7 years — or 10 years for some bankruptcies — but you may be able to get them removed earlier. Still, the effect of derogatory marks on your credit will fade over time, especially if you take other steps to improve your credit.
The best way to deal with derogatory marks is to do what you can to avoid them. Set reminders to pay your bills on time, and talk to your creditors if you cannot make payments. Consider options such as 0% balance transfer cards or debt consolidation personal loans to help you manage debt, or talk to a nonprofit credit counselor about your options.
It’s possible to remove derogatory marks from your credit report. You can dispute derogatory marks that are on your credit report in error, or you may be able to negotiate with a creditor or collection agency to remove the mark once you’ve paid the debt. After 7 years, most derogatory marks will fall off your credit report.
Paying off a derogatory account should improve your credit score. Generally, resolving your debts will improve your credit history. You can improve your credit score with on-time payments and low credit utilization.
It’s tough to predict exactly how much your credit score will improve when you get a derogatory mark removed from your credit report, as your credit score depends on various factors, including your on-time payment history, credit utilization, and credit mix.
However, removing a derogatory mark can positively impact your credit score, as it removes a negative item from your credit report. Generally, the impact on your credit score will be more significant if the derogatory mark is recent and you have a limited credit history.
If you pay, a derogatory mark may fall off your credit report, but there’s no guarantee. You can try to negotiate a “pay for delete” agreement to request that the creditor or debt collector remove the derogatory mark from your credit report.
Even if the derogatory mark isn’t removed from your credit report, paying off the debt can still positively impact your credit score over time, as it shows that you are taking steps to improve your credit standing.
It’s possible to qualify for a mortgage with derogatory marks on your credit report, but your lender may ask you to resolve any negative accounts before you get full approval.
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A long-time points and miles student, Jessica is the former Personal Finance Managing Editor at U.S. News and World Report and is passionate about helping consumers fund their travels for as little cash as possible.
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2 comments
beavis
June 20, 2023
If you payoff an account, make a payment or in any way acknowledge the debt, you reset the clock for credit reporting purposes. Yes, you could be sued if you are within the statute of limitations (consult your attorney) but if you get outside of the seven year mark your credit should not be impacted (one again, consult your attorney). I would not reset the clock if I could avoid it which means paying a debt could actually damage my credit. If you are past the statute of limitations (giving you leverage) but not close to the seven year point, you can possible negotiate with the creditor to pay them an arranged sum in exchange for a deletion letter to clear your credit.
Jessica Merritt
June 21, 2023
It’s a common misconception that acknowledging or paying on debt resets it for credit reporting purposes, but that’s not true. Depending on your jurisdiction, you might reset the statute of limitations, but only for lawsuits — not credit reporting. See Experian’s advice on this topic: https://www.experian.com/blogs/ask-experian/paying-off-account-will-not-restart-the-seven-year-time-frame/
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