What Is a Remark Code on Your Credit Report?
Gain clarity on your credit report. Discover what remark codes signify, their effect on your credit score, and steps to navigate them.
Remark codes on a credit report are informational notations added by credit bureaus or credit furnishers to provide additional context about specific accounts or events. These codes offer a deeper understanding of credit file entries, going beyond basic account status. While distinct from numerical credit scores, the underlying events they describe influence a consumer’s credit history and perceived creditworthiness.
Understanding Remark Code Categories
Remark codes categorize various events impacting credit accounts, providing clarity on their status and history. One common category relates to account status, indicating how an account has been managed or closed. Examples include codes for accounts that are “closed by consumer,” “closed by credit grantor,” or “transferred to another lender.”
Another significant group of remark codes pertains to collection activities and derogatory events. These can include notations such as “placed for collection,” “charge-off,” or “repossessed,” detailing instances where a debt was not paid as agreed and escalated. Codes like “foreclosure proceedings started” or “involuntary repossession” fall into this category. Public record events also have associated remark codes, primarily “bankruptcy filed,” which identifies instances of formal insolvency proceedings.
Less common are codes for special conditions, such as an account “affected by natural disaster,” “paying under a partial payment agreement,” or a “credit card lost or stolen.” These notations offer granular detail about the circumstances surrounding an account’s reported status.
How Remark Codes Affect Credit Scores
Remark codes do not directly impact a credit score; rather, the underlying financial event or account status they represent influences the score. For instance, a “charge-off” remark does not lower a score simply because the code is present. Instead, the charge-off itself, reflecting an unpaid debt written off by a creditor, significantly reduces credit scores.
Similarly, a “bankruptcy filed” remark points to a public record event that has a negative effect on creditworthiness. Credit scoring models, like FICO and VantageScore, analyze payment history, amounts owed, length of credit history, new credit, and credit mix. Negative events such as late payments, accounts in collection, or bankruptcies are heavily weighted by these models, leading to a decrease in scores.
Conversely, positive or neutral remark codes, such as “account closed by consumer” or “account paid as agreed,” do not negatively affect scores because they reflect responsible credit management or a neutral account status. The score reflects the financial behavior and circumstances documented by the remark, not the code itself.
Steps to Address Remark Codes
Consumers who identify remark codes on their credit report, especially those they believe are inaccurate, should take proactive steps to address them. First, obtain a copy of the credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. This can be done weekly through AnnualCreditReport.com, which is authorized by federal law.
Review all sections of the report to identify any discrepancies or unfamiliar entries, including remark codes. Once an inaccurate remark code or underlying entry is identified, initiate a dispute with the credit bureau. This process is governed by the Fair Credit Reporting Act (FCRA), which requires credit bureaus to investigate disputes, typically within 30 days, though it can extend to 45 days.
Clearly explain what is wrong, why it is incorrect, and provide supporting documentation, such as account statements or correspondence with creditors. Disputes can be filed online, by mail, or by phone, with certified mail recommended for written disputes to maintain a paper trail.
If the credit bureau’s investigation confirms an error or cannot verify the information, the item must be removed or corrected. If the remark code is accurate but represents a past negative event, such as a late payment or collection, it generally remains on the report for approximately seven years from the date of delinquency, while bankruptcies can remain for up to ten years.