Key Derrogatories

• Examples of a key derogatory include late payments, charge offs, collection accounts, foreclosures, judgments, settlements and bankruptcies. The Federal Trade Commission reports that most derogatory information must remain on credit reports for seven years, with bankruptcy information remaining for 10 years.
  
  

Descriptions

• Charge offs are accounts closed by creditors because of nonpayment. Collection accounts are accounts sold or assigned to debt collectors. A judgment is a court order ordering a debtor to pay a certain amount of money for an unpaid debt. Debt settlement allows debtors to resolve delinquent accounts, often by paying less than the full balance. Settled accounts usually appear on credit reports as “settled” or “settled for less than the full balance.”
  
  

Loopholes

• Creditors and debt collectors have leeway to remove derogatory information, if they choose to do so. Some engage in a tactic called “pay for delete,” which allows a creditor to remove negative information from a credit report if the debtor pays the full balance for a delinquent debt. For example, a credit card company might agree to delete a charge off from a credit report if the debtor pays the debt. Although pay for delete is possible, many creditors and debt collectors will not offer the agreements, because they feel they are unethical. Creditors can also remove late payments from credit reports. This can happen when a debt who usually pays on time contacts the creditor to explain why a payment was late
  
  

Disputes

• Debtors can remove a key derogatory by contacting the credit bureau to complain that the information is outdated or wrong. The Fair Credit Reporting Act forces credit bureaus to investigate the debtor’s complaint. The credit bureau will remove or correct the key derogatory if the investigate warrants the action.
  
  

Agencies

• Debtors should not attempt to clear credit reports with the help of for-profit credit repair agencies, according to the Federal Trade Commission. The FTC reports that the agencies often charge large fees for services they cannot deliver.