Do the Comments on Your Accounts Affect Your Credit Scores?

May 1, 2023

What are narrative codes?

When you check your credit reports from Experian, TransUnion, or Equifax, you’re likely to find a list of accounts and/or collections. Associated with each of these entries you might find details or context about the account in plain English. These details are commonly, and informally, referred to as narratives or narrative codes.

Narrative codes are the collection of the universe of possible text entries associated with your credit report accounts or collections. These narrative codes include actual formal credit reporting language, which is a combination of account status codes, payment rating codes, consumer information indicator codes, compliance condition codes, and dozens of other possible codes.

These codes or “comments” provide additional information about your accounts. They are a way for a data furnisher (i.e., bank, credit card issuer, lender, etc.) to provide additional context about their entries on your credit report. Some are required by law while others are part of the credit industry’s reporting guidelines.

Here are just a few examples of the comments you might find associated with the items on your credit reports:

Account closed at credit grantor’s request
Auto Lease
Account closed by consumer
Variable/adjustable rate
Fixed-rate

This is just a very small sampling of the comments you may find on your credit reports. The credit industry’s guidelines manual is over 350 pages long so it wouldn’t be practical to try to provide a fully comprehensive list of such comments.

How do credit report comments impact your credit score?

The answer posed in the title of this article is yes, the comments or codes on your credit reports absolutely can impact both your FICO and VantageScore credit scores. But, not all of them are seen and considered by scoring models. The small sampling above includes codes that are not harmful to credit scores. But as you’re about to see, there is no shortage of codes that can result in a lower credit score. You’re going to notice something similar across all of them, which is that they indicate some sort of mismanagement of the account.

Here are some examples of narrative codes that a credit scoring model could consider to be derogatory:

Charge off
Settlement accepted on account
Account assigned to internal collections
Repossession
Account included in bankruptcy
Foreclosure or foreclosure completed
Foreclosure process started
Forfeiture of deed in lieu of foreclosure
Account currently 30 (60, 90, 120, 150 or 180) days past due

If a creditor or credit reporting agency adds one or more of these comments, and there are a whole lot more of them not listed, to an item on your credit report, it might result in a lower credit score the next time a lender checks it. Some of the comments above are considered as major derogatory events by credit scoring models. So, not only might your credit score drop, but it could do so significantly.

Removing potentially negative comments from your credit reports

The Fair Credit Reporting Act (FCRA) lets you dispute any information on your credit report with which you disagree. This right to dispute extends to the comments as well. If an account on your credit report incorrectly indicates that it was “included in bankruptcy”, for example, you can send a dispute to the appropriate credit bureau and ask them to correct or delete the account.

Because comments on your credit reports can impact your credit scores, it’s wise to be proactive if they are incorrect. But if a negative comment is accurate, you’ll have to wait for it to age off your credit reports over time.

The FCRA makes the credit bureaus remove most types of negative information from your credit report after seven years (with a few exceptions). While you’re waiting for negative comments to come off your credit report, be sure to manage the rest of your credit wisely so not to increase the number of them.

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