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This won't be lethal, but like a black spot on a white canvas, my eye would go directly to it. "How do you fail a no credit course???", one would think.I failed a course that has no credits (ie. does not factor into GPA) but is on my transcript. I have a 3.9+ GPA besides this one incident. Do adcom members pay attention to courses not factored into GPA? Will this be viewed in a negative way in my application, should I explain it? This course cannot be retaken.
As such, I would grill you about this in interview.
Many secondaries have spaces for "Anything else you want to add?" or "Explain any poor grades". Use them