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Derogatory Marks and How We Can Fix Them

A derogatory mark is a damaging detail on your credit report that can possibly be eliminated, or you can structure better credit to overshadow the negative.

Derogatory marks have a great impact on credit score, the ability to pursue credit applications, and interest rates proffered by creditors. Due to the fact that these details remain on your credit report for seven to ten years, it is vital that you are aware of how to eliminate them.

What Effect Do Derogatory Marks Have On My Credit?

The nature of the negative mark and the score decides the impact of the mark on credit score. A bankruptcy mark will have a greater impact than a debt settlement. In addition, a mark affects high credit score more than it does on a lower credit score.

What Are the Types of Derogatory Marks?

 Late Payments

Late payments show up on your credit report when you are 30, 60, or 90 days late in paying an account, and stay on your report for up to seven years after being reported. The later the payments occur, the more they affect your score. A most recent late payment will cost you 15 to 40 points on your score, and more if the late payments are applied to all accounts.

A 90-day late payment deems heavier on your credit score, as well as continuous late payments. The lenders will also report 120-day late payments which can be almost as harsh as charge-offs or collections.

Charge Offs

After a 180-day late payment, the creditor cancels your debt which is known as a charge off. These stay on your report for seven years and have a grave impact on your score. If your account is charged off, the lender can sell it to the collection agencies, making the situation dire.

Charge offs cause potential creditors to decline your credit applications because they see charges offs as a denotation of financial risks. However, if you do measure up, the interest rates will be much greater.

Tax Liens

Majority of the time, tax liens are the consequences of unpaid taxes, regardless of the state or federal level. At federal level, the government can put a lien on your property to fulfill the cost of your tax. And so, your chances to get approved for credit applications are minimal because the property rightfully belongs to the government.

Tax liens remain on your credit report until you pay them off. Credit bureaus are vigilant in the matter of reporting tax liens as they are on public records.

Civil Judgements

Judgements are on public records and are also known as civil claims. Creditors ensue a judgement for an unpaid balance which can be taken to court. A judgment taken out against a consumer can largely impact their credit and remains on the report for seven years.

Judgements signal to a person’s inability to pay their debt. If taken to court, they take a lot of time and money, which a lender looks to dodge. Furthermore, a judgement not only affects the credit, but also the finances of the debtor.

Collections

Collections are most usual sort of accounts on a report. Around of one-third of Americans have collections on their reports mostly due to medical bills, but also because of other accounts like pending credit cards, loans, utilities and parking tickets which can be sold to collections.

Collections are rooted from debts sold to third-party institutions if it has remained pending for too long. They have a great impact on your credit and remain so for seven years. In addition, they lower your chances of credit acquisitions as they indicate to a refusal to pay your debts.

Foreclosures

When a homeowner is incapable of paying the mortgage on their home for at least 3 months or more, the creditor will proceed with a foreclosure. This is initiated by a Notice of Default with the County Recorder’s Office. If the payment is not received even after the foreclosure, the homeowner is evicted and reported to the bureaus.

Bankruptcies

People file for bankruptcies when they have concurred a large amount of debt and are unable to pay it. These usually arise from medical bills and other causes with not sufficient income.

Bankruptcies have a great effect on credit. These individuals are taken to court, where their bankruptcy claims eradicate their previous debts and gives them a fresh slate. However, these events are recorded in their credit reports.

Repossessions

A repossession is the loss of property purchased on a loan. These occur when the person in unable to pay off the loan and the creditor takes possession of the property bought, to make up for the loan however much or little.

Repossessions have a grave impact on your credit and potential creditors view this an inability to pay back loans.

How Can I Improve My Credit?

 

Derogatory Mark	How to improve credit score?
Late Payments	Pay off the debt and ensure you make all payments on time
Collections or Charge offs	Pay off the debt with negotiations to lower the amount.
Tax Liens	Pay the taxes you owe and make on-time payments in the future.
Civil Judgement	Pay off the amount before it is taken to court, make any payments that prevent judgements.
Debt Settlement	Pay the full debt amount to prevent any negative effects.
Foreclosure	Make punctual payments on your property and keep other loans open.
Bankruptcy	Restructure your credit with credit applications and make necessary on-time payments.
Collections	Continuous payments of bills and full payments of debts.

 

How to Remove Derogatory Marks from Report?

Following are the steps to disputing derogatory marks on your report:

1.    Request and check your credit report. Every credit bureau is obligated to offer you a free credit report each year. Request yours and check for any inaccuracies.

2.    Dispute negative items. If found, these negative marks need to be disputes with the bureaus within 30 days of your notice.

3.    Follow up on the dispute. Be vigilant in your contact with the bureau and ensure you have all the necessary documents for the dispute. The removal helps to repair your credit. Lowering credit utilization rate will also aid in the improvement of your credit.

These steps can either be done by yourself or you can take help from a credit repair organization like Blackwater Credit Repair where we make this process much easier and efficient. Contact us for a free credit report consultation.