Credit History: How to Fix a Negative Mark

Your credit score is more than just a number. It is your financial DNA and a living history of your finances.

And any marks on this have real-life ramifications that can ultimately impact loan amounts and interest rates (mortgages included!), limits on credit cards, car insurance premiums, the need for a security deposit on utilities, and even your ability to rent or own a home.

Conversely, if you maintain a good credit score, it guarantees certain rewards while traveling, dining, shopping, and even living in your home.

So what can you do if you end up with a negative mark on your credit history? Don’t panic—and certainly don’t avoid the situation altogether, which only leads you into a downward spiral. A negative mark can be fixed over time.

How Do Negative Marks Impact Scores?

Negative marks on a credit report tend to damage a higher score more than a lower one. And the amount of time a negative mark stays on a credit report determines the overall damage it does to a credit report. Here are some things that can cause a negative mark:

  • Late Payments
    A late payment is a negative mark that increases in severity every 30 days the loan is not paid. The late payment remains in the credit history for seven years from the date of the delinquent payment.

  • An Account in Collections
    When the debtor misses several payments, the creditor puts the account holder in collection. The responsibility of recovery is put on a collection agency.

  • Bankruptcy
    The debtors can request relief through filing for bankruptcy after which they are held liable for paying some or none of the debt.

  • Civil Judgment
    Losing a civil lawsuit holds the credit holder liable for the payment as it reflects in the credit report.

  • Debt Settlement
    Debt settlement is an agreement where the parties agree to settle part of the debt that is owed.

  • Foreclosure
    This situation arises when an individual falls behind or misses their mortgage payments. The bank sells the home as collateral for the settlement of the loan amount.
  • Tax Lien
  • If an individual fails to pay off their debts, then the government attempts to collect the debt by placing a lien. For example if you do not pay for something that is owed for work done on your home, the contractor can put a lien on your home until the money is paid through the government.

 

Factors Leading to Negative Marks

Your credit score is based on the information presented in the credit file—payment history, the amount owed, length of credit history, new credit acquired, and types of credit in use by the debtor. Credit agencies use this information to compile a score, also known as the FICO score, based on the weight carried by the above factors.

Negative marks on credit scores are nothing to blink at. They remain for up to seven to 10 years—or even more based on different banking procedures. There’s good news, though: These are all things within your control. As long as you properly manage your credit, you shouldn’t have a problem with your credit score.

How to Remove Negative Marks

The primary way to remove negative marks from your credit report is through regular review. Negative marks can only be fixed once identified. Consider reviewing your credit reports regularly, preferably every month.

If you discover negative marks, it’s important to take specific steps, including:

  • Review Closed Accounts
    Closed accounts are negative marks that have been settled but are still reflecting in the credit score. Such an account reflects in the credit report for around seven to twelve years—or even more, based on the severity of the settlement.

  • Raise Dispute Against Incorrect Negative Marks
    Disputes must be raised and reported immediately to the credit bureaus so that they can conduct investigations for resolving the issues. Also, incorrect disputes must be raised and reported immediately for so they can be corrected.

  • Take Measures for Healing Credit
    To improve credit, it’s important to make payments on time, plus keep balances as low as possible.

  • Wait for the Negative Mark to Fall Off
    Waiting for the right time is important while managing credit reports. The negative mark rebounds from the report in two years and the healing/recovery process begins. Once again, timely minimum payments are integral for maintaining a good credit score.


At the end of the day, the proactive approach is the best one. If you know your credit score and you’re regularly monitoring it for inconsistencies and negative marks, you’ll be best equipped to fix any issues right away—vital for maintaining a good score.

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