What Is a Derogatory Item on Your Credit Report?

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What Is a Derogatory Item on Your Credit Report?

Missing a payment even once can seriously set back your credit score, but the damage will be even worse the longer you put off bringing the account current.

What Is a Derogatory Item on Your Credit Report? - PinterestDerogatory items on your credit report can be a big problem for your finances. These negative marks can stay on your credit report and damage your credit scores for several years.

Fortunately, there are some things you can do to avoid getting derogatory marks as well as to reduce the damage if you do end up with a negative item on your credit.

We’ll help you understand minor and major derogatories, how derogatory items affect your credit score, and what you can do about them.

What Is a Derogatory Credit Item?

The word derogatory simply means negative, so a derogatory credit item is a negative item on your credit report.

Derogatory items hurt your credit score and can impact your chances of getting approved for credit.

Examples of negative items on your credit report might include late payments, collections, foreclosures, bankruptcies, and more, which we’ll define below.

There are two types of derogatory items: minor derogatories and major derogatories. 

Minor Derogatory Items

A minor derogatory is a payment that was past due, either 30 days late or 60 days late. If, after the 30- or 60-day missed payment, you brought the account current again, then it is considered a minor derogatory mark. However, if you are currently 30 to 60 days late, it is considered a major derogatory, which we will discuss below.

30 Days Past Due

Lenders cannot report your account as late to the credit bureaus until 30 days have elapsed since the missed due date, so if you pay your bill anywhere between one to 29 days after the due date, you should not see a derogatory item added to your credit report.

However, your lender may charge a late fee, so it’s still best to pay all of your bills on time. If you’ve never been late on the account before, you can contact your lender and see if they will waive the late fee for the accidental late payment. Many lenders are willing to do this for account holders that otherwise have good records.

Unfortunately, if you have a promotional interest rate, you will most likely forfeit the promotional rate if you miss a payment, even if you were only a few days late.

Missed payment derogatory item

A 60-day late payment could result in an interest hike from your credit card issuer.

60 Days Past Due

If you miss your due date twice in a row and become 60 days late, the situation becomes more serious. At this point, the credit card issuer can hit you with a penalty APR of up to 29.99%.

Not only will this high interest rate apply to all your purchases for at least the next six billing cycles, but in this case, the bank is also allowed to apply the penalty rate to your existing balance as well. Not all credit cards have penalty APRs, however, so check the terms of your card to see if you could be subject to one.

Thankfully, “universal default” is a thing of the pastthe practice of credit card companies raising consumer’s interest rates if they were late on any loan with any lender was banned by the Credit Card Act of 2009.

However, the exception is if you have multiple cards with the same bank. In this case, if you miss a payment on one of the cards, the bank is allowed to raise your rates on all of the cards you have with them.

Major Derogatory Items

A court judgment against you is a major derogatory.

A court judgment against you is a major derogatory item.

A major derogatory credit item is typically defined as an account that is 90 days past due or more. If you have a major derogatory on your credit report, that is a huge red flag to lenders, and it may hinder you from being able to qualify for credit.

Other examples of major derogatory credit items include:

  • Charge-offs – This is when a creditor writes off your account as a loss because you are so delinquent on the debt that they assume that the debt is unlikely to be paid. This typically happens after six months have passed without payment.
  • Collections – After your account has been charged off by the lender, they may try to regain a portion of their losses by selling the account at a discount to a debt collector, who then becomes the owner of the debt and will try to collect the funds from you.
  • Court judgments – A judgment is when a lender or debt collector sues you over an unpaid debt and the court orders you to repay it. A court judgment gives the lender or debt collector more powerful options to collect the money you owe them, such as garnishing your wages or putting a lien on your home.
  • Foreclosures – This happens when you become so delinquent on your home loan that the bank takes possession of the home so they can try to recover the balance of the loan by selling the property.
    Bankruptcy is the most serious derogatory credit item.

    Bankruptcy is the most serious derogatory credit item.

  • Settlements and short sales – A settlement is an agreement between you and your lender that you will pay back part of the debt you owe them. The lender will then stop trying to collect more money from you after you have paid the settlement amount, but since you did not pay the full amount you owed, it is a derogatory item. A short sale is considered to be a type of settlement since the lender is agreeing to sell the property for less than the mortgage balance you owe.
  • Repossessions – This is when the lender takes back possession of something such as your car or your house because you defaulted on the payments.
  • Public records – Public records such as delinquent taxes, liens, unpaid alimony, and unpaid child support, are derogatory items that used to be severely damaging to your credit, especially if there was still a balance owed.*
  • Bankruptcy – Filing bankruptcy means you are asking to be legally released from paying back some or all of your debts. Because of this, and because it usually affects several of your credit accounts, not just one, it is the most damaging derogatory item. It will almost certainly devastate your credit score and reduce your chances of getting approved for credit for a significant amount of time, although it is possible to recover from bankruptcy eventually.

*A note about public records: the National Consumer Assistance Plan, which was implemented in 2017, enacted stricter requirements for public records that can appear on credit reports. As a result, some public records, like civil judgments and tax liens, are no longer included in credit reports because they do not meet the new requirements.

According to credit.com, “At this point, the only derogatory public record that should appear on your credit report is bankruptcy. If a tax lien or civil judgment still appears on your credit report, you should dispute that record with the credit reporting agencies.”

Although most public records will no longer appear on your credit report and will therefore not affect your credit score, they may still affect your chances of qualifying for credit if a lender decides to look up your public records.

How Do Derogatories Affect Your Credit Score?

As you may have guessed, any derogatory mark on your credit report can seriously damage your credit score. However, they do not affect everyone equally. There is no predetermined amount of points that is associated with any given credit action.

Here’s how credit expert John Ulzheimer put it in an article on The Simple Dollar:

“There is no fixed value to any derogatory entry. Their value is always relative to the presence or absence of other similar derogatory entries on a credit report. So, the answer to the question ‘how much?’ varies from ‘not at all’ to ‘a whole lot’ — and everything in between.”

In other words, the effect of a derogatory account could range from a significant drop in your credit score to potentially no difference in your credit score at all. It is going to depend on 1) what else is already in your credit file and 2) the severity of the derogatory information.

A bankruptcy, which is the worst type of derogatory item you can have, may result in a FICO score that is more than 200 points lower than the FICO score you had before the bankruptcy, as stated by credit.com. It can also affect your credit scores for up to seven to 10 years, at which point it is finally removed from your credit report.

For those who have pristine credit records, even one 30-day late payment, a minor derogatory item, can do some serious damage to their credit scores. On the other hand, if you already have some negative items on your report, additional derogatory entries won’t have as big of an impact.

Derogatory items will also have a larger impact on those with thin or short credit files, meaning they do not have very much positive credit history to help soften the blow of a negative item. In contrast, those with a thicker file or longer credit history will have more positive history in their file to help balance out any negative events.

Credit Scoring Buckets

Credit scorecards, or "buckets," can affect the impact of a derogatory item on your credit score.

Credit scorecards, or “buckets,” can affect the impact of a derogatory item on your credit score.

Another complication is the concept of credit scorecards or “buckets,” which score groups of consumers differently based on certain characteristics of their credit profile.

As a hypothetical example, there could be a scorecard for consumers with no major derogatories and a scorecard for consumers with one major derogatory. In this case, getting your first major derogatory mark could put you into a different scorecard, wherein your score would be calculated by a different scoring algorithm.

While the impact of a derogatory item is going to vary from person to person depending on their unique individual credit history, one thing we do know for sure is that derogatory accounts become less impactful to your credit as time passes.

In fact, it is still possible to have good credit with a derogatory mark on your credit report if it is an old item and you have balanced it out with positive credit history since then.

How Late Payments Affect Your Credit Score

In terms of how bad late payments are for your credit, it’s not so bad to miss a payment on one account for one or two months, according to an article on The Balance. However, missing payments on several different accounts for one to two months will be worse for your credit. And finally, missing even one payment for three months in a row will be equally as harmful as a charge-off or collection since they are all major derogatory items.

The Impact of a Derogatory Item May Depend on the Credit Scoring Model

It is still possible to have good credit with a derogatory mark on your credit report if it is an old item and you have balanced it out with positive credit history.

VantageScore and FICO scores treat certain derogatory items differently.

When it comes to collection accounts, for example, collections that have been paid off and small-balance collections have different impacts depending on which credit score is used.

FICO 8, the most widely used credit score, considers both paid and unpaid collections to be major derogatories. That’s one reason why paying off a collection account may not always increase your credit score.

FICO 9 and VantageScore 3.0 and 4.0 disregard collection accounts altogether once they have been paid. In addition, these three scoring models assign less weight to medical collections. FICO 8 and FICO 9 ignore collections that had an original balance of less than $100.

Does Paying the Past-Due Balance Delete the Derogatory Mark?

Unfortunately, simply bringing the account current by paying the past-due balance does not make the derogatory mark disappear. It does not negate the fact that you were late paying your bill, which is important information that helps determine your credit score and helps lenders decide whether they want to do business with you.

Payment history is the most important part of both your FICO score and your VantageScore for a reason. It is highly predictive of how much of a credit risk you represent to lenders. For that reason, accurate derogatory information must stay on your credit report even after you have caught up on payments.

However, can still be beneficial to pay off the derogatory items on your credit report. Experian says, “While paying off a derogatory account won’t automatically remove it from your credit history, it will be updated to show it has been paid, and lenders may view a paid derogatory more favorably than an unpaid one.”

How to Minimize the Credit Score Impact of a Derogatory Item

Paying the past-due balance does not make the derogatory mark disappear, but it is usually still a good idea.

Paying the past-due balance does not make the derogatory mark disappear, but it is usually still a good idea.

Although bringing an account current will not remove the negative information from your credit report, it is still a good idea. Having made a late payment in the past and then catching up is better for your score than currently being late.

Moving forward, do your best to make sure you’re not late again.

Maintaining a positive credit history from now on is the most important thing you can do to minimize the effect of a derogatory item and restore your credit back to health.

Once you have done all you can to mitigate the damage of a derogatory item, then it simply becomes a matter of waiting until the negative mark ages off your credit report.

How Long Can Derogatory Credit Items Stay on Your Credit Report?

In general, derogatory marks can be reported for up to seven years after the account was first reported as late, which is referred to as the date of first delinquency (DOFD).

Dispute derogatory items on your credit report that are inaccurate via mail.

Dispute derogatory items on your credit report that are inaccurate via mail.

If you get a court judgment against you, however, that will remain on your credit report for seven years after the judgment was issued, not seven years from the date you were first late on the original debt.

Certain types of accounts can stay on your credit report even longer. Depending on the type of bankruptcy, for example, bankruptcy may stay on your credit report for up to 10 years.

According to Experian, since a Chapter 13 bankruptcy requires you to pay some of the debts you owe, this type of bankruptcy is removed from your credit report after seven years. With a Chapter 7 bankruptcy, you don’t pay back any of the debt, so it is removed 19 years after the date of filing instead of seven years. The individual accounts associated with the bankruptcy will still disappear seven years after the DOFD for each account; filing for bankruptcy does not affect the seven-year timeline.

Besides a Chapter 7 bankruptcy, all other delinquencies are required by law to be deleted from your credit report after seven years. However, the impact of a derogatory mark on your credit score will decrease over time, especially if you maintain a positive credit history going forward that can help outweigh the negative items.

Removing Derogatory Credit Items From Your Credit Report

If you have inaccurate negative items on your credit report, it’s in your best interest to dispute the derogatory items on your credit report as soon as possible.

Your credit reports should have instructions on how to dispute derogatory credit items that have been put on your credit report in error. The best way to dispute inaccurate negative information is to send a separate letter for each dispute via certified mail, along with any accompanying evidence that is needed to verify the validity of your claim.

Make sure to dispute the derogatory items on your credit report with the credit bureaus as well as with the creditor that is furnishing the data.

You can read more about how to dispute inaccurate derogatory items in our article, “How to Fix the Most Common Credit Report Errors.”

Should You Write a Letter Explaining Derogatory Items on Your Credit Report?

Letter Explaining Derogatory Items on Credit Report

You may need to write a letter explaining derogatory items on your credit report when you apply for a mortgage.

A letter of explanation is a letter that you write to a lender explaining the reason for negative marks on your credit report. This may be required by your lender when you apply for a mortgage, particularly when applying for a home loan that is subsidized by the government, such as an FHA loan or VA loan.

Your mortgage lender needs to be certain that you will be able to pay off your home loan. They will want to understand the circumstances of any derogatory items on your credit report in order to determine whether you have learned from your mistakes and taken steps to improve your situation or whether you may still be at risk of defaulting on a loan in the future.

A good letter of explanation should be truthful, clear, and detailed. If there were extenuating circumstances that led to you becoming behind on your bills, explain what happened and how you resolved the problem. As with a credit report dispute, be sure to include any documentation that supports your story along with your letter of explanation. Try looking up sample letters of explanation online if you need help. 

How to Avoid Getting Derogatory Marks on Your Credit Report

Since accurate and timely derogatory information can’t legitimately be removed from your credit report, the best strategy is to prevent them from happening in the first place.

Here are some tips to help you keep your credit in the clear.

  • To ensure you never miss a payment, set up automatic payments for all your loans and credit cards.
  • As an additional precaution, also set up notifications that alert you when your statement is available and when your due date is coming up so that you can keep an eye on your accounts and make sure that the payments are going through. Knowing exactly when your bill is due and how much you need to pay will also allow you to make sure that you have sufficient funds in your bank account to make the required payments.
    If you accidentally miss a payment, call your creditor right away to see if they can waive your late fee.

    If you accidentally miss a payment, call your creditor right away to see if they can waive your late fee.

  • If you are in a period of financial hardship and can’t afford to make the minimum payment, contact your creditor and try to work out an arrangement with them to temporarily reduce or defer payments.
  • If you accidentally miss a payment but you usually pay on time, bring the account current by making the payment as soon as possible. Then, contact the lender and ask if they would be willing to waive the late fee. If you pay before 30 days have passed since your original due date, you can avoid getting a derogatory mark reported to the credit bureaus. If you’re 30 to 60 days late, you’ll have a minor derogatory on your credit report, but not a major derogatory. Try your best to pay before the account becomes 90 days past due, at which point it will count as a major derogatory.
  • Regularly check your credit reports for derogatory items that don’t belong to you so you can dispute the errors and have them removed from your credit report.


Having derogatory items on your credit report, particularly major derogatories, can be highly damaging to your credit for a long time. If there are derogatory items in your past, balance out the negative effects by adding positive payment history going forward, and use smart credit strategies to avoid getting derogatory marks in the future.

Ellen Johnson
Ellen Johnson
Ellen Johnson is Content Director & Writer at Tradeline Supply Company, LLC. She has been with the company since 2018. Ellen creates engaging, informative content to help you understand complex topics in credit and personal finance. She aims to empower you to make smart financial choices while also highlighting structural inequalities in our financial systems.


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  2. […] which are major derogatory items, are one of the worst things to have on your credit report. Like other negative information on your […]

  3. UPTOWISH says:

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  4. […] Derogatory entries on your credit report, such as 30-day late payments, 60-day late payments, collections, and more, can seriously damage your credit score. Is there a way to get derogatory items removed from your credit report so that your score can bounce back? Let’s find out. […]

  5. […] If you have bad credit or if you have never used credit before, you might be feeling discouraged about the prospect of getting credit anytime soon. It can feel impossible to get credit if you have a thin credit file or a history of derogatory marks on your credit report […]

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