How to Remove Negative Remarks from Your Credit Report

Arunima had applied for a loan, but her application was rejected. When she tried to get clarity on the reason, the bank executive said that her credit report had negative remarks.

Now, Arunima doesn’t know what a credit report is or how she received these remarks. However, the irony is that they were incurred due to her own past financial mistakes. Here, mymoneykarma has decided to explain the concept of negative remarks on a credit report, especially for Arunima and other such people who are unaware of it.

What Are These Negative Remarks?

A negative detail on a credit report indicates that an individual didn’t pay loans or bills for a long duration, thereby breaching the terms that were agreed upon while borrowing.

Where Do They Come From?

A negative remark can come on a credit report through three avenues: 

• Banks and other financial institutions report negative information to the credit bureaus, which are then reported as a disparaging remark.

• Credit bureaus add public records such as bankruptcy in the credit report.

• Errors in the credit report: Mistakes in payment dates, account status, date of loan closure, etc.

Now, let’s discuss some of the frequent financial events that generate them: 

Late Payments - If you have missed one or two payments, it stays as a minor form of negative record on your credit report. But if you delay payment every month, the severity of remarks will invariably increase.

Debt Settlement - If your account has been reported as delinquent, it will be mentioned negatively on your credit report even if you manage to settle the debt with the lender.

Foreclosure - A foreclosure happens when you fail to pay mortgage EMIs, after which the bank attempts to force a sale of the house that was used as collateral for the loan. 

An Account in Collections - When a creditor comes to believes that you will ultimately not pay what you owe them - usually after consecutive missed payments - it can mention the account as ‘charge off’ for tax purposes. After a creditor has charged off, it will sell your account to a collections company to get a payment from you.

Bankruptcy - If your case has been filed as bankruptcy, the negative information on your credit report will never be removed. Even if your debts are discharged in bankruptcy, the balances will be reported as 0. This negative record will be visible as a black spot on your credit report for not less than a decade.

How Long Do They Stay?

Generally, for events such as foreclosure or late payments, negative remarks blemish a credit report for almost seven years, continually serving as a reminder of poor credit history. However, in the event of bankruptcy, it can stay for up to 10 years.

How Do They Affect You?

It damages your credit score

Your credit score will slump based on the severity of negative remarks on your report. For instance: A ‘late payment’ remark would affect your score less drastically in comparison to a ‘foreclosure’ remark.

Lenders won’t trust you

Negative remarks will taint your credit report for up to seven years, giving potential lenders a red signal that you can’t be trusted. They will either give you a lesser amount than requested or will charge a higher interest rate to compensate for the risk they are taking in lending money to someone who has a history of questionable credit behavior.

What Can You Do About It? 

Monitor your credit report

Start checking your credit report regularly, so that if you come across any errors or an unexpected drop in your credit score, you can work on the problem at the right time. For checking your credit report for FREE, use mymoneykarma's intelligent finance tool.

Verify the age of the debt

Negative records normally get removed after seven years in most of the cases. However, if it doesn’t, then you may have to directly request the credit bureau to delete it.

Report the errors in your credit report

In case you are not at fault and have become a victim of mistakes committed either by the lender or the credit bureau, take prompt action accordingly.

Work on improving your credit score

Removing negative remarks from your credit report is not a one-day task. But as they say, time heals all wounds.

Start taking baby steps to improve your credit score either by clearing the due credit card payments or by paying more than the minimum due amount. With time, these steps can repair the impact of negative remarks on your credit report.

To Sum Up

Negative remarks are best avoided from your credit report, but getting them does not mean the end of the world. In any case, it is important that you stay aware of its causes, consequences, and remedies.

Check your credit score regularly to make sure you are on track. Also, you can always approach mymoneykarma for any assistance in credit repair.