Derogatory
Credit
What is derogatory credit information?
Generally speaking, this is a remark on your credit report that includes the presence of collections, public
records, charge-offs, or any past due accounts at least 60-days delinquent. All types of negative notations in a
credit report are considered derogatory credit information.
However, there are certain limitations regarding derogatory credit information. According to the Fair Credit
Reporting Act (FCRA), all derogatory credit information should be removed from credit reports after seven years.
This is done to help consumers rebuild their credit scores and finally recover from past mistakes. Hence, all
incorrect listings including charge-offs or public records that appear on a credit report after seven years should
be disputed with any of the credit bureaus. This law also states that a credit account in collection will only
appear (as a derogatory credit information) on a credit report for 7.5 years. This starts more or less 180 days
following the date of the account’s first delinquency. It should also be noted that this seven-year rule only
applies to derogatory credit remarks and not to current accounts or those that are closed in good standing.
If derogatory credit remarks that are past the seven-year period do appear in a credit report, how do you remove
them? It is always advised to request a copy of your credit report every now and then to check its accuracy and
look for incorrect derogatory credit information. You are only allowed to obtain a copy of your credit report once
a year so you should make sure to have your report from all three agencies: Equifax, Experian, and Transunion.
Should there be errors and incorrect derogatory credit remarks, the only solution is to write a dispute letter to
the credit bureau. Before doing so, you should make sure that you have all the supporting documents you need such
as old statements, receipts, and cancelled checks. It is still possible to dispute items without these but it will
definitely be much easier if you have back-up documents to support you.
You should also make sure that the letter you write includes a clear explanation of the inaccuracy of the disputed
item and that your attached supporting documents prove them. Do not just try to follow a template you find on the
internet. Make it more personal and more comprehensive. When you mail the letter, use certified mail and request
for a return receipt. Once the bureau receives the letter, they will have thirty days to respond, whether they will
deny or accept the dispute. You should receive your new credit report without all incorrect derogatory credit
information within thirty days.
Is there a way to avoid derogatory credit remarks? The only thing that you can do to avoid them is to
never miss a due date and to pay in full if possible.
Source: Credit Cards For People With Bad Credit Rating
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