What Are Remarks on Your Credit Report and What Do They Mean?
Discover what the brief notations on your credit report mean. Gain insight into how they shape your financial history and credit standing.
A credit report serves as a comprehensive record of an individual’s financial behavior, detailing their borrowing and repayment history. Lenders, landlords, and some employers use these reports to assess financial trustworthiness. Understanding your credit report is fundamental for managing personal finances and navigating important life events.
Understanding Remarks on Your Credit Report
Remarks on a credit report are brief statements or codes that offer additional context about specific accounts or your overall credit history. These notations clarify data, explain unusual situations, or provide specific instructions for reviewers. They appear alongside individual accounts or within a dedicated section, offering a deeper narrative beyond numerical data.
The primary purpose of remarks is to offer clarity and transparency regarding entries on the report. For instance, a remark might explain why a payment was late or provide details about a settled debt. These remarks can be added by creditors who report account activity to the three major credit bureaus—Equifax, Experian, and TransUnion. Credit bureaus also add remarks based on public records, such as bankruptcies. Consumers can add their own statements to their report, offering their perspective on financial events.
Categories of Remarks
Remarks on a credit report fall into two main categories: those initiated by creditors and those initiated by consumers. Each type serves a distinct purpose in providing additional information.
Creditor-initiated remarks are added by lenders or collection agencies to provide specific details about an account’s status or history. For example, “account closed by grantor” indicates the lender closed the account, while “account closed by consumer” shows the borrower initiated the closure. A remark like “settled for less than full amount” signifies that a debt was resolved for a reduced sum, impacting credit standing. Other common creditor remarks include “transferred to another lender,” which means the debt was sold, or “account paid in full,” indicating successful debt repayment. Remarks might also note “account in dispute” if there is an ongoing disagreement about the account’s validity or accuracy.
Consumer-initiated remarks, also known as consumer statements, allow individuals to add their own brief explanations to their credit report. These statements can clarify negative information or provide context for financial events. For instance, a consumer might add a statement of dispute, such as “consumer states account is not hers,” if they believe an account is fraudulently listed on their report. Another common use is to explain late payments due to unforeseen circumstances, like “consumer states late payment due to medical emergency” or job loss. While these statements do not alter the underlying data, they provide valuable context to potential creditors.
How Remarks Influence Your Credit Profile
Remarks on your credit report have practical implications for your financial standing and how lenders perceive your creditworthiness. Different types of remarks influence your credit score and lending decisions. Negative remarks, often termed “derogatory marks,” have a direct and adverse impact on credit scores. These include notations for late payments (30 days or more past due), charge-offs, repossessions, foreclosures, or bankruptcy filings. Severity depends on the remark type and your existing credit history; higher scores often experience a larger drop from new negative information.
Not all remarks negatively affect a credit score directly. Remarks like “account closed by grantor” or “account closed by consumer” are neutral, as closing an account does not inherently lower a score. Consumer statements, while not directly influencing credit scores, provide mitigating context for negative events. Lenders and creditors review the entire credit report, including remarks, to gain a comprehensive understanding of an applicant’s financial history and circumstances.
Remarks provide valuable narrative context to the numerical data, helping lenders understand the story behind the numbers. For example, a consumer statement explaining a late payment due to a temporary hardship, such as a medical emergency, might lead a lender to view the application more favorably. This added context is important for significant lending decisions, like mortgages, where a manual review of the credit history is part of the process.
Managing Remarks on Your Credit Report
Regularly reviewing your credit reports from all three major bureaus—Equifax, Experian, and TransUnion—is important to ensure accuracy, including checking for remarks. Consumers are entitled to a free copy of their credit report from each bureau annually. This proactive review identifies inaccurate or unverifiable information.
If you discover an inaccurate remark, you have the right to dispute it under the Fair Credit Reporting Act (FCRA). The dispute process involves contacting the credit bureau in writing, explaining the error, and providing supporting documentation. The credit reporting agency has 30 days to investigate and must remove or correct information if it cannot be verified.
Consumers can also add a consumer statement to their credit report, particularly to explain negative yet accurate information. This statement, often limited to a certain number of characters or words, provides your perspective on a specific event, such as a late payment caused by an unexpected hardship. While a consumer statement does not change the reported data or directly impact your credit score, it offers valuable context to potential lenders reviewing your report.