In a Nutshell
If you’ve experienced financial misfortune, from late bills to bankruptcy, that negative information can appear on your credit reports as a “derogatory mark.” It may stay there for several years, but there are a few ways you can address it: dispute the mark if it’s an error, start healing your credit or wait out the clock.A derogatory mark may plague your credit reports for the better part of a decade, but there are still ways you can work to improve your credit.
Derogatory marks are negative, long-lasting indications on your credit reports that generally mean you didn’t pay back a loan as agreed. For example, a late payment or bankruptcy appears on your reports as a derogatory mark. These derogatory marks generally stay on your credit reports for up to 7 or 10 years (sometimes even longer) and damage your scores.
If you have a lower score coupled with a derogatory mark, you may have a hard time getting approved for credit or may get less-than-ideal credit terms. But the good news is that the impact to your credit of all derogatory marks decreases over time.
How do derogatory marks impact my scores?
A derogatory mark will damage your credit scores. But how much? That depends on a few factors.
A derogatory mark typically affect a higher score more than it will a lower score. Also, a minor derogatory mark, which can be caused by a late payment, generally damages your scores less than a major derogatory mark, which can be caused by something like a foreclosure.
The amount of time a derogatory mark stays on your credit reports depends on what type of mark it is. The chart below covers the different types of derogatory marks and how long they will likely remain on your credit scores.
What leads to a derogatory mark?
Here are the financial events that can lead to a derogatory mark and how long it might stay on your credit report.
| What can lead to a derogatory mark? | What is it and what happens? | How long might the derogatory mark appear on a credit report? |
| Late payments | An account payment that is past due. This is generally the only form of a “minor” derogatory mark. After the payment is late, its severity may increase every 30 days it’s not paid. | Seven years from the date of a delinquent payment. |
| An account in collections (or charge-off) | When a creditor thinks you ultimately won’t pay what you owe, usually after several missed payments, it can write or “charge off” the account for tax purposes. After a creditor has charged off the account, it can sell it to a third-party collections agency. The collections company will try to get a payment from the borrower. | Seven years from the first date of a delinquent payment. |
| Bankruptcy | This is a special legal proceeding you can enter to request relief from debt obligations. You’ll either pay back some or none of your debt. | 7 to 10 years from the filing date, depending on the type of bankruptcy. |
| Civil judgment | If you’ve lost a civil lawsuit that requires you to pay debt or damages, it can appear on your credit reports. |
Paid civil judgment: Seven years from the date the judgment was filed. Unpaid civil judgment: The seven-year time frame may be renewed depending on local laws. |
| Debt settlement | You and a creditor can reach an agreement where you pay back only part of the debt you owe. | Seven years from either the date the debt was settled or from the date of the first delinquent payment, depending on whether there were missed payments. |
| Foreclosure | A foreclosure can happen if you fall seriously behind or miss many of your mortgage payments. The bank will attempt to force a sale of the home, which is then used as collateral for the mortgage loan. | Seven years from the filing date. |
How long can a derogatory mark impact my credit scores?
Derogatory marks can remain on your credit for up to seven to 10 years or more, depending on what type it is. However, your scores can start improving before that if you take steps to make your credit healthy over time. That can include making at least the minimum payment on time and keeping your balances low.
Bottom line
If you have a derogatory mark on your credit reports, it will remain there for several years and can damage your scores. But you can be proactive about making healthy credit moves.
Check your credit reports regularly, question and dispute errors on the reports, start rebuilding your credit and then let time take care of those derogatory marks.