Derogatory Information on Credit Reports

Derogatory information on your credit report can cause a lending institution to deny your application for a loan legally. This negative information can include bankruptcies, late payments and high amounts of debt. Three credit bureaus keep information about your credit history: Experian, TransUnion and Equifax. Derogatory information can stay on your credit report for up to seven years, but bankruptcies can stay on a report for 10 years.

Impact

Derogatory information on your credit report will do more than just lower your credit score and lessen your chance of being approved for a loan. Those with bad credit are more likely to be denied to live in a rental property because derogatory information on a credit report could lead to the fear of missed rent payments. Employers that run credit checks on new applicants may not extend job offers to those who have bad credit because of the belief that those with derogatory information on credit reports are more likely to engage in fraudulent activities or steal from the company.

Disputing Inaccurate Information

The Federal Trade Commission (FTC) states that you have the right to dispute derogatory information on your credit report made in error per the Fair Credit Reporting Act. This derogatory information can include claims that you paid your bill late or went over your credit limit when you did not. To dispute inaccurate information, write a letter to the credit bureau that states the error you found, along with a copy of your credit report and proof that you are correct. Examples of proof you can submit include receipts or bank statements.

Identity Theft

If, after reviewing your credit report, you find derogatory information due to someone opening a line of credit or using your credit card without your authorization, contact your local police department at its nonemergency phone number so an officer can file a police report. Contact the credit card company, as well, so it can freeze the unauthorized account, prohibit further spending and work toward resolving the matter. The FTC states you also can contact your state attorney general or local consumer affairs office for assistance.

Raising Your Credit Score

If you have derogatory information on your credit report because of missed payments or high amounts of debt, you can be proactive about the situation. You can raise your credit score and improve the information on your credit report by creating a budget that allows you pay off your debts without incurring more debt. Remind yourself of the dates your bills are due by writing the information in a calendar. Stop making payments with credit cards and pay for all your purchases and bills with cash, a check or debit card.