When you order your credit report, you will see a number of codes below your accounts or events in your financial history. If you order a combined report from all three credit bureaus, one of these codes is KD. This stands for Key Derogatory, and it describes one of a number of negative events that can cost you points on your credit score.
Where It Appears
KD is one of the terms that may appear in the "Account History" portion of your report. If an account is current and there is no problem, you should see the code OK in green for that month. If you see a yellow number; 30, 60 or 90, this describes the number of days of a late payment. KD usually appears in red.
What It Describes
Depending on the account or event, KD can describe a number of different things. It could refer to a charge-off, a claim or a term default. It may also It could refer to a bankruptcy petition or discharge. It could also be used if you reaffirmed one of your loans in bankruptcy, but then had that rescinded. Usually credit reports use a different code, RF, for foreclosures, but occasionally a foreclosure can be represented by KD.
Unexpected Derogatories
Sometimes you can experience a KD on your report when you believed you were doing the right thing. Some people who perform a short sale in order to avoid a foreclosure may find that it appears on their credit report as KD. This can be despite the fact that the bank agreed to the sale. A credit account that goes into collection will appear as a KD even if you subsequently pay off the balance in full---just the fact that it went into collection allows it to remain as a derogatory on your report regardless of the payment status.
Age of Account
If you are seeing KD on your report describing an event that is more than seven years old, you may be able to dispute whether it should still appear on your report. Many negatives must be removed after this period. Some others, bankruptcy information included, can remain on your report for up to 10 years. File a dispute online with the credit bureaus if you think it should be removed, and check the rest of your report for similar old negatives.
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