How long does a repossession stay on your credit report?
A car repossession stays on your credit report for up to 7 years. While the impact that it has lessens over time, it can negatively affect you the whole time it’s on your report.
How does a repossession affect your credit?
Having a repossession on your credit report can be very damaging to your credit. A repossession may contribute to you not being able to get a loan for things like cars, credit cards, home loans, or anything else that requires a credit check.
Why do repos happens?
A repossession typically occurs when you stop making the monthly payments on an auto loan.
When you get an auto loan, the bank you have the loan through technically owns the car until the loan is paid off in full. If you do not pay the loan in full and stop making payments, then the bank can essentially take their car back from you.
Your creditor can seize your vehicle at any time once your loan is in default. In most states, they don’t even need to notify you that they will do this. Creditors will typically then sell the vehicle to try and recoup the money they loaned for its purchase.
What if it was a voluntary repossession?
Whether they have taken your car or you have voluntarily surrendered it, it makes no difference when it comes to your credit. The effects of the repo are just as damaging to your credit.
Can I be sued for the remainder of the balance?
In addition to seizing your vehicle, your creditor can also sue you for the additional amount they lack in order to pay off their original investment.
For example, let’s say you still owed $15,000 for a car and that car got repossessed by the bank. The bank then sold that car for $10,000. They could still sue you for the remaining $5,000. The bank will almost certainly sue you for the remainder; then you will also have a judgment on your credit report.
Can a repo be removed from your credit report?
Yes. It is possible to have a repo removed before the 7 years. You can do one of two things when you are faced with a repossession.
Sometimes a bank will allow you to renegotiate your payment terms so that you can afford to pay them more easily. If you can convince them to do this, they will sometimes remove the repossession for you.
Make sure you get it in writing that they will delete the repo from your credit reports once you have paid it in full.
Can I get a car loan after repossession?
Yes, but first you must get it taken off your credit report. There are very few lenders that will give you a car loan with a repo on your credit history.
If they do, the amount of interest you’ll be paying will be enormous. It’s possible that you will pay 3x to 4x what the car is worth.
Filing a Dispute
Another thing you can do is file a dispute with the credit bureaus. If the lender can’t verify that the repossession is valid or fails to answer the dispute within 30 days, then they must remove it from your credit report.
There are good companies out there like Lexington Law that can help you remove negative items like repossessions from your credit reports. They have many years of experience with helping people and they make sure the job gets done correctly.
How can I improve my credit after a repossession?
Check out the story below to see how one of our readers got a repossession deleted:
A while back I went through some pretty rough times financially. I found myself unemployed and my bills began to accumulate. I was barely able to provide for my family – much less pay my bills. My credit cards went into default and things just got worse from there.
I started getting collections calls at all hours of the day. The bank started threatening to foreclose on my house and repossess my cars.
It took me several years to get my financial situation back in order. At first, I wasn’t able to buy a home or get a vehicle.
After being told about Lexington Law, I decided to give them a call to see if they could help me out. At this point, I was willing to try anything to repair my bad credit.
Contacting them was really a turning point for me. Their professional staff was extremely helpful and after a few weeks, I began to see a difference.
The credit bureaus sent me several letters stating that items had been removed and my credit score started to climb.
Letter from Transunion
His credit scores have dramatically improved since he signed up.
Other Client Testimonials:
— R.S., Lexington client
I would never have been able to achieve the results you have on my own and hold down a full-time job at the same time. I look forward to getting your updated emails just to see how many more negative entries have disappeared.”
— K.L. & B.L., Lexington clients
Discount for Family Members, Couples, and Active Military!
They are now offering $50 off the initial set-up fee when you and your spouse or family members sign up together. The one-time $50.00 discount will be automatically applied to both you and your spouse’s first payment.
Active military members also qualify for a one-time $50 discount off the initial fee.