How to Fix Key Derogatory Items on a Credit Report for Free

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Key derogatory items refer to any remarks on your credit file that lowers your score and makes it difficult for you to acquire a mortgage loan, credit card, auto loan or small business loan. These remarks include late payments, collection accounts, judgments and charge-offs. Fortunately, there are ways to remove derogatory items from your credit report and improve a low score. You don't need to hire an attorney or credit repair service. By making a few simple adjustments, you can fix your credit report for free.

Pay off credit judgments. If failure to pay a creditor resulted in a credit judgment, contact the original creditor or the court system and express your desire to pay off the balance. In turn, ask the courts to remove the judgment from your credit report. Be patient. This isn't an immediate process and it can take up to three months to have a judgment deleted from your files.

Settle collection accounts. Creditors often hire collection agencies to handle past-due accounts. They report this information to the credit bureaus; and having a collections account on your report lowers your credit rating. Agree to pay off the past-due balance in full or set up a payment arrangement.

Order a copy of your credit report once or twice a year. Look for unfamiliar credit accounts, inaccurate information or any other error that can lower your credit score. Next, contact the creditor and ask it to remove the negative remark from your report. If it is uncooperative, write a dispute letter to the three credit bureaus.

Lower your debt-to-income ratio. Even if you pay your bills on time every month and have never missed a payment, carrying a high credit card balance lowers your credit score and some lenders won't approve your credit application. Create a budget and resolve to pay off debts. Rather than spend your disposable income on dining out, shopping and recreation, use this money to pay down your credit cards.

Write an explanation. Often, bad credit results from loss of employment, illness or other unexpected events. Fortunately, credit bureaus allow consumers to include a written explanation on their credit report. This gives you the opportunity to explain the reasons behind a derogatory item. Lenders take your explanation into account when evaluating your credit application.