derogatory mark
A negative item on a credit report such as a late payment, collection, bankruptcy, or foreclosure.
Example
“The derogatory mark from the 2019 collection account would fall off her report in 2026.”
Memory Tip
DEROGATORY — negative. Each mark drags your score down and stays for years.
Why It Matters
Derogatory marks significantly damage your credit score, making it harder and more expensive to borrow money for important purchases like homes or cars. Lenders view these marks as evidence that you may struggle to repay debt, so they either deny your application or charge you higher interest rates. Understanding what counts as a derogatory mark helps you make better financial decisions and protect your creditworthiness.
Common Misconception
Many people think that paying off a derogatory mark immediately removes it from their credit report, but this is not true. While paying off a debt is important, the derogatory mark typically remains on your report for seven years from the original delinquency date, though its impact weakens over time as it ages.
In Practice
Suppose you miss three consecutive credit card payments of $200 each in 2023. This late payment becomes a derogatory mark on your report, potentially dropping your credit score by 100 points or more. When you apply for a mortgage in 2024, the lender sees this mark and either denies you or offers you a loan at 7.5 percent interest instead of the standard 6 percent rate, costing you tens of thousands of dollars more over the life of the loan.
Etymology
From Latin 'derogare' meaning to detract — marks that detract from your creditworthiness.
Common Misspellings
Check your credit score free — no impact
Related Terms
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