I see closed derogatory listed on my credit report. What does that mean?

A “Closed – Derogatory” mark on your credit report simply means the account in question defaulted and was closed as a result. In other words, it has charged off. This does not, however, mean the notation will soon come off your credit report. If accurate, such records will remain on your file for seven years.

That’s one reason not to take the “closed aspect” of a closed derogatory too literally. Furthermore, if the debt in question hasn’t been paid, it could manifest itself as a collection account if the original lender sells it to a collection agency. The debt collector could also file a lawsuit to recoup amounts owed if the amount owed is large enough and you own enough assets to make legal action worthwhile for the creditor. Either option would result in another derogatory mark on your credit report, thus adding to the damage your credit score has already incurred.

The best course of action — after verifying the legitimacy of the closed derogatory account in question — is to try to satisfy your debt obligation by paying what you owe in full or negotiating an amended agreement with whoever now owns the debt. This will effectively stop the bleeding as far as your credit standing is concerned, and allow you to begin the rebuilding process.

In that respect, signing up for a free WalletHub account will help significantly. It will tell you exactly what steps you’ll need to take for your score to rebound as well as provide personalized grades on different aspects of your financial performance. You will also benefit from free daily credit score updates and an early fraud-warning system in the form of 24/7 credit monitoring.