How Long Does a Repossession Stay On Your Credit Report For?

If your car has been repossessed, you might be wondering, how long will a repossession stay on your credit report for? This post provides you with everything you need to know about repossessions and how long they will affect your credit score for.

How Long Does a Repossession Stay On Your Credit Report?

A repossession, whether voluntary or involuntary, stays on your credit report for 7 years from the date you missed your first car payment. After the 7 year period, the repossession will automatically be removed from your credit report. That said, as a repossession ages, its impact on your credit score will lessen until it’s ultimately removed from your credit report after 7 years.

If more than 7 years have passed since your repossession, and your repossession hasn’t been removed, you can file a dispute with the credit bureau showing the repossession to have it permanently removed from your credit report.

That said, people often mistakenly believe because they engaged in a voluntary repossession that the repossession will not appear on their credit report. But, the reality is that both a voluntary repossession where you willingly surrender your car and an involuntary repossession both have the same impact on your credit and remain on your credit for 7 years.

So, you might be wondering, when does a repossession occur? A repossession occurs whenever a persons stops making timely payments on his or her car loan. If you miss a certain number of payments, and stop communicating with your lender, your lender will likely contact a towing company and ask them to retrieve the vehicle from you. After they take possession of the vehicle, they will likely auction it off to recover some of the money that you owe them.

The reason that lenders are able to take back your vehicle stems from the fact that your lender owns the vehicle until you’ve finished making payments on it. If you fail to make your payments, the lender can repossess the vehicle and sell it to recover some of the money that you owe them.

Voluntary and Involuntary Repossession Stay On Your Credit Report for 7 Years

Voluntary repossessions and involuntary repossession remain on your credit report for 7 years from the date you missed your first payment. When your vehicle is repossessed, this means that you failed to make payments on your account up until the point where your vehicle was repossessed. In this case, your entire car loan account will be removed from your credit report within 7 years of your first missed payment. The account will be automatically removed and there is nothing else that you need to do to have it taken off your credit report.

When you look at your credit report, don’t let other dates confuse you as to when the account will be removed from your credit report. For example, if you pull a copy of your credit report, you will often see the following dates: (1) account open date, (2) account closed data, (3) date of last payment, and (4) date account was updated. None of these dates have any bearing as to when the repossession will be removed from your credit report.

Remember, your repossession will be removed from your credit report within 7 years of your first missed payment. That’s all you need to know to determine when the repossession will fall off your credit report.

Does a Repossession Affect Your Credit Score?

Yes, both a repossession and the events that led up to the repossession can have a significant negative impact on your credit score. For example, if you missed some of your car payments before the repossession occurred, late payment marks were likely added to your credit report, significantly lowering your credit score.

Additionally, once a repossession mark is added to your credit report, it will cause additional damage to your credit. The higher your starting credit score, the bigger the drop would have been when late payments were reported and when a repossession was added to your credit report.

Of course, the impact a repossession has on your credit score is different from one person to another, depending on what was already on your credit report. If you had bad credit to start with, maybe not much has changed. But, if for example, you had a flawless credit history, repossession and late payments can destroy your good credit.

Can You Remove a Repossession From Your Credit Report?

It should come as no surprise that a repossession is a serious derogatory mark that can cause significant damage to your credit. If the repossession was valid, meaning there are no errors in the information that’s being reported on your credit report, you will not be able to remove the repossession from your credit report.

However, if the repossession or your account contains negative information that is wrong, you can file a dispute with the credit reporting bureau showing the information to have it removed from your credit report.

After you file a dispute, the credit bureau has 30 days during which to conduct an investigation to determine whether the information is accurate. If the investigation reveals that the info is incorrect, it will be permanently removed from your credit report. However, if the investigation shows that the information is correct, it will not be removed from your credit report.

How to file a dispute to have wrong information removed from your credit report?

  1. Review your credit report
  2. Identify the wrong information
  3. Gather evidence to support your claim that the information is wrong
  4. File a dispute with the credit bureau reporting the wrong information
  5. Submit the evidence you have supporting your claim
  6. Wait for the credit bureau to conduct its investigation
  7. The credit bureau will provide you with a decision

How to Prevent a Repossession?

People often believe that ignoring vehicle payments when they cannot make them can make the problem go away. However, if you anticipate that you will be unable to make your monthly payments on time, you should not ignore calls and letters from your lender. Communicating with your lender can help you avoid late payments being reported on your credit report and a repossession from occuring.

In fact, many auto lenders may allow you to skip a payment or two if you explain your situation to them. This can give you the breathing room necessary to get back on track for making payments on your account.

That said, if your lender does allow you to skip two payments, you’re not off the hook for the payments. Your lender may move the two payments to the end of your loan, and may even charge you a small fee for allowing you to skip the payments.

The key here is communication. Don’t ignore calls and letters from your lender because if you do, your lender will eventually repossess your car if you’ve missed enough payments on your account.

Can a Repossession Be Removed From Your Credit Report?

A repossession can be removed from your credit report if there is wrong information being reported on your credit report. You can file a dispute to have wrong information removed from your credit report. However, if the repossession is valid and the information being reported is accurate, chances are that you will not be able to have it removed from your credit report.

How Many Points Does a Repossession Drop Your Credit Score?

A repossession and negative payment marks associated with it can drop your credit score by over 100 points.

Do You Still Owe Money After a Repossession?

You may still owe money even after your car has been repossessed. When your car is repossessed, your car lender will likely take your vehicle and send it to an auction to recover some of its money. Of course, most of the time, your auto lender will not be able to sell the vehicle for the amount of money you owe on the car.

If your car sells for less than what you owe, your lender will come after you for the remaining amount of money. Some lenders will sell the remaining amount of money that you owe to a collection agency. You will then have to deal with the collection company to satisfy the outstanding amount that’s due. You should not ignore a collection company because it can place a collection account on your credit report, causing further damage to your credit.

For example, if you owe $14,000 on your car and your lender is only able to sell it for $10,000, the lender may sell the remaining $4,000 debt to a collection agency. The collection agency will then add a collection account to your credit report for the remaining $4,000.

A collection account can cause significant damage to your credit. So, avoid it if possible.

Paying off a collection account will not remove it from your credit report. A collection account will remain on your credit report for 7 years from the date you first missed your car payment. After the 7 year period, it will automatically be removed from your credit report.

How Long Does a Voluntary Repossession Stay On Your Credit Report?

A voluntary repossession remains on your credit report for 7 years from the date you missed your first payment. Unfortunately, voluntarily surrendering your vehicle will not prevent a repossession from appearing on your credit report.

How Long Does An Involuntary Repossession Stay On Your Credit Report For?

An involuntary repossession remains on your credit report for 7 years from the date you missed your first payment on your car loan. After the 7 year period, the repossession will be removed from your credit report.

Can You Finance a Car With a Repo On Your Credit Report?

It may still be possible to finance a car even though you have a repossession on your credit report. However, finding a finance company will be significantly more difficult, and if you’re approved for an auto loan, chances are that your terms will not be very good. You may be charged a very high interest rate because the lender is taking a higher risk by lending you money to buy a car since you’ve defaulted on making car payments in the past. If you have any general questions or comments, please feel free to leave them in the comments section below.