What is a "Derogatory Account"?

[pcn]

Something new on my credit report from True Credit. What is the significance of a "derogatory account"? As if late payments weren't a bad thing on the report?

A derogatory account has appeared on your credit report.
Here are the details of this account:

Reported By: Experian
Reported On: 06/28/2009
Alert Type: Grid Code 4 (120 Days Delinquent
Creditor Type: Complete Department Stores
Date Last Updated: 06/25/2009
Derogatory Amount: 00001313
Date of Alert: 06/27/2009
Creditor Name: GEMB/JC PENNEY
Creditor Address: PO BOX 984100
EL PASO, TX 79998-4100
Creditor Phone Number: (800)5420800

[AngelinaCatHub]

One of the common misunderstandings we discovered is that derogatory information in the credit bureau file (credit report) can be removed either by the consumer or with the help of a credit repair company without paying or otherwise satisfying the underlying account. This turns out to be the exception rather then the rule. To remove derogatory credit history the accounts almost always need to be satisfied. We are unsure where this misunderstanding arose: perhaps wishful thinking on the part of the consumer or over-aggressive sales pitches used by credit repair companies.

However, we did find that derogatory accounts are commonly removed from credit bureau files and credit reports in certain instances without ever being paid:

* Credit bureau deletes the derogatory information upon dispute by a consumer (or credit repair company) and the subscriber (creditor) fails to verify within 30 days.
Under this circumstance derogatory credit history can be deleted from the credit report - even while the debt remains unpaid. It is also true that these listings stand a good chance of reappearing on the credit file sooner or later when later verified or re-reported by the subscriber (creditor) that reported the derogatory information to the credit bureau in the first place. This "re-reporting" also occurs in the case of older collection accounts that are assigned, sold or otherwise transferred from one collection agency to another and the new collector reports the item to the credit bureau as a derogatory trade line.
* Credit bureau deletes the derogatory information automatically, upon dispute by a consumer (or credit repair company) because the information is over seven years old and therefore obsolete.
According to the Fair Credit Reporting Act, once the derogatory information in the credit bureau file is over 7 years old, it must be deleted by the credit bureau from the report as obsolete. However this does not always happen as planned and it seems usually to be due to simple credit bureau failure to delete the item or, because the creditors or collectors misreport the "last activity" date to the credit bureau (i.e. when a collector takes over the account and reports the derogatory information to the credit bureau, the collector updates "last activity" with the date they took possession of the derogatory account).

Based on our findings, it is indeed possible to remove derogatory accounts from the credit report without ever paying or satisfying the account. But, unless the reporting period for the account has elapsed making the derogatory account obsolete, the probability is low. If you have derogatory accounts that still have balances and are not over 7 years old, it is best to resolve the accounts first and obtain deletion letters if possible, before attempting to address the credit report.

http://www.consumerfinancehub.com/Debt/repairing_bad_credit_on_the_credit_report_without_.aspx

It simply means the account was not satisfied. 'Hub

[StartingOver08]

pcn, did you file a BK? Have you been discharged yet?

If so, the account should read iib (included in bankruptcy) with a zero balance.
The reference to the account being 120 days past due should ONLY be there if the account was 120 days past due prior to your filing date. The creditor can only report the lates prior to filing. After you are discharged there is some credit repair required as the creditors do not report the correct status. You will need to spend some time disputing to get the CRA's to report correctly.

[pcn]

No, we haven't filed yet. We are still in the undecided (13 vs 7, lawyer shopping) phase. Hopefully this week one of the two we interview will finally give us that warm fuzzy feeling. So as I understand it, this info remains even after we file, since it is accurate info. This notation was just different than the "30 day late/60 day late, etc" notations I was used to seeing. So it made me wonder how it was different. The others are "bad", now this one is in the "really bad" category? Is a "derogatory report" weighed differently than a "120 days past due"?

[StartingOver08]

I believe the label "Derogatory" is just a catagory - as in derogatory accounts vs satisfactory accounts. It is not looked at a 'really bad' - all the accounts that are past due will be in the derogatory section.

The derogatory accounts are usually listed first. Any person/creditor reviewing your file is going to look to the information in the whole report but probably pay more attention to the derogatory accounts - IF you have an actual person/creditor reviewing your report at all. Most of the reviews now are so automated they just use the score.

If you are going to file, that will change everything. The BK is the big issue and will be listed under the public records section of your report. But, once you file, you will find your score begins to improve quickly.

[HHM]

No, we haven't filed yet. We are still in the undecided (13 vs 7, lawyer shopping) phase. Hopefully this week one of the two we interview will finally give us that warm fuzzy feeling. So as I understand it, this info remains even after we file, since it is accurate info. This notation was just different than the "30 day late/60 day late, etc" notations I was used to seeing. So it made me wonder how it was different. The others are "bad", now this one is in the "really bad" category? Is a "derogatory report" weighed differently than a "120 days past due"?

Any "true" negative information can be on your credit report up to 7 years (certain public records can stay for 10). So yes, the past due entry stays. But once you file BK, the amount owed will be (should be) put to zero and and the notes on the account should say something to the effect of Included in BK. Note, the zero'ing of the account balance is a very positive occurance and often acts as a counter to the negative effects of the missed payments and the BK.

[arami008]

Even post bk and discharge accounts can show as derogatory? Some accounts are updating on my CRs but still say derogatory? How are they suppossed to show ? Some say IIB and 0 balance but some say Charge off and derogatory?

[HHM]

Even post bk and discharge accounts can show as derogatory? Some accounts are updating on my CRs but still say derogatory? How are they suppossed to show ? Some say IIB and 0 balance but some say Charge off and derogatory?

If the charge off occurred before your filed BK, it can still be on there, but the account should still reflect the BK in some way.