What ‘Derogatory’ Means on Your Credit Report?
Every lender, whether it is a bank or a financial institution, insists on your Credit Information Report (CIR) before sanctioning a loan. Your credit score, as it is popularly called, is an important eligibility criterion when applying for a loan. Your credit report is also important because the lender wants to find out whether or not there are any derogatory remarks in your credit history. If there are any derogatory remarks, your loan application might be in jeopardy even if you have a good credit score.
Do you know what are derogatory remarks?
What is Derogatory Remark in the Credit Report?
‘Derogatory’ literally means belittling or deprecatory. Thus, a derogatory remark in your credit report means a bad remark about a particular loan or credit. Your credit report lists all your prior loans or credits which you have availed. Against each loan or credit, there is a remark depicting the payment history of that particular loan or credit. A derogatory remark is a negative remark showing that your credit history is bad.
What are the Different Types of Derogatory Remarks Which Can be Found on a Credit Report?
There are various kinds of derogatory remarks which are found on your credit report with respect to each type of credit you had availed in the past. If you do not know the different remarks, you might miss out on their importance. So, here are the different types of derogatory remarks which you can find on a credit report:
- DPD – This is the most important column in your credit report. DPD stands for Days Past Due. It shows the number of days the repayment was due beyond the actual repayment date. In the DPD column, if there is a remark showing ‘000’ or ‘STD’, it means that there was no default. STD remark means that the loan repayment occurs within 90 days. However, any other remark entered in the DPD column besides ‘000’ or ‘STD’ would be considered as a derogatory remark. Such derogatory remarks include SMA (a special account which shows that the standard account is moving towards a sub-standard one), SUB (shows a sub-standard account wherein repayments are being made after 90 days), DBT (is a doubtful account which has remained as a sub-standard account for 12 months) and LSS (is an account in which there is a loss and the account is not collectible).
- Suit Filed – this is a very grave derogatory remark on your credit report. Suit filed denotes that you have defaulted on your loan and the lender has filed a lawsuit against you to collect the outstanding loan. The reporting of suit filed, as per RBI norms, is divided into four categories – No Suit Filed, Suit Filed, Willful Default and Suit Filed (Willful Default).
- Post (WO) Settled – this means that the lender has written-off an existing loan account and after writing off the account, the loan is settled between the lender and the borrower. Moreover, this remark also states that the amount of settlement was lower than the actual balance of the outstanding loan.
- Written Off (WO) – another bad remark, this denotes that the lender was not able to collect the repayment of the loan from you and so the loan account was written off by the lender.
- Account Purchased and Settled – this remark shows that a particular loan account was purchased by the lender and the lender and the borrower have settled the loan amount.
- Account Purchased and Written off – this denotes that the lender purchased the loan account from another lender (a bank or a financial institution). After the loan account was purchased, the new lender has written off the purchased loan.
- Written off and Sold – the meaning of this remark is that the lender first wrote off the loan account and then sold the loan account to another lender (a bank or a financial institution).
Derogatory remarks are an important consideration in your credit report. So, understand what does derogatory mean on a credit report so that you can understand your report better. Also try and clear up derogatory credit to avail a loan. However, there are Personal Loans with bad credit which you can avail if you need an urgent loan. If interested, you can visit Bajaj Finserv Personal Loan and find out more about Personal Loans.