What Is a Derogatory Public Account?

Your credit report helps potential creditors such as banks and credit card companies determine whether you are creditworthy. In addition to listing your payment history for any accounts you currently have or had in the past, a credit report also lists any derogatory public accounts. Understanding what this is and how it affects your credit can help you become a more informed consumer.

Definition

A public account, also referred to as a public record, is any court ruling regarding your debts. This can include bankruptcies, foreclosures and judgments filed by creditors. Once a court records the information and makes it public, the credit bureaus are then free to place it on your credit report at the request of the creditor.

Impact on Credit Report

Derogatory public accounts can stay on your credit report for up to seven years. However, certain types, such as a bankruptcy, can stay even longer, up to 10 years. This will lower your credit score significantly and be viewable by potential creditors, who may as a result decide to deny you credit. Just how bad the impact is on your credit score will depend on a number of factors, such as whether you're delinquent on other accounts.

Minimizing Negative Impact

Make payments on your public records on time, and aim to have them paid off as soon as possible. This will lessen the long-term impact of a derogatory public record on your credit score because it tells potential creditors that you're being responsible with your debt. While the derogatory public account will remain on your file, its status will be updated to show that you made good on the debt.

What You Can Do

If a derogatory public account is correct and it has been less than seven years (or 10 for bankruptcies) since the court issued it, the credit bureaus have every right to report it. All you can do in this case is wait it out, then make sure the account comes off your report after the seven-year limit (or 10-year limit for bankruptcies). However, if there is a derogatory public account on your credit report that is not yours, or that is yours but is being reported incorrectly or already should have rolled off, you can contact the credit bureau to dispute it and have it removed or corrected.