How Many Points Will My Credit Score Increase When a Repo is Removed?

If you’re like any of us, you want to maintain the best credit score possible. Whether you want to open a credit card, apply for an auto, or apply for a home loan, your ability to do so depends on having a good credit score. If you bought a car and ended up having your car repossessed, a repossession was probably added to your credit report. Repos can significantly lower your credit score. So, will your credit score increase when a repo is removed from your credit report? We will answer this question in much detail below.

How Many Points Will My Credit Score Increase When a Repo is Removed?

Your credit score will increase by 100 or more points when a repo is removed from your credit report. A repo is a derogatory mark that is added to a person’s credit report when he fails to make payments on a car that he has financed. Regardless of whether a repossession is voluntary or involuntary, it will result in extensive damage to a person’s credit report. Removal of a repo from your credit report will definitely result in a dramatic increase to your credit score. Repos usually remain on your credit report for 7 years. After the 7-year period, a repo should automatically be removed from your credit report.

What is a Repo (Repossession)?

A repossession occurs when a person finances a car through a bank or lender and stops making payments on his car loan. After the payments stop, the lender repossesses (takes back) the car. When a repossession takes place, a derogatory mark known as a repo is added to the person’s credit report. A repo usually causes a lot of damage to a person’s credit score. If you have been unfortunate enough to have your car repossessed, you know how much a repo can affect your credit score. Although there is no set number as to how many points a repo can drop your credit score, many have reported that a repo can lower your credit score by 100 to 150 points. So, it is definitely something that you want to avoid. If you can’t avoid it, try hiring a credit repair service to remove the repo from your credit report. Removing a repo from your credit report can increase your credit score by more than 100 points.

Can You Remove a Repo from Your Credit Report?

Although removing a repo from your credit report is extremely difficult, here are some tips that you can follow to remove a repo from your credit report:

  • Negotiate with Your Lender – A repossession is not profitable for your lender. In fact, by the time your lender repossesses your car and sells it an auction, the lender will have lost a ton of money. So, try negotiating with your lender. Ask them if it’s possible to pay off the car or pay a lesser amount to settle the debt. For some lenders, it may be more convenient for them to settle the debt rather than repossessing your vehicle and selling it for less than what you owe. Also, if your lender is willing to negotiate, ask them for a written agreement that spells out the terms of your agreement to avoid troubles down the road.

  • File a Dispute – If you find a repo on your credit report that does not belong to you, try to contact the lender who added the notice to your credit report and ask them to remove it. If the lender refuses to remove it, you can file a dispute through the credit reporting bureau that is displaying the repo on your credit report. For example, if the repo appears on your Experian Credit report, dispute it through Experian. After you file a dispute, the bureau must investigate it and will verify the accuracy of the repo with the lender. If the bureau finds that the repo does not belong to you, it will remove it from your credit report.

How Long Does a Repo Last on Your Credit Report?

A repo remains on your credit report for 7 years. As the repo ages, it will have a lesser impact on your credit score, but until it is removed, it will continue to keep your credit score low. That said, the important date for calculating how long a repo remains on your credit report from the original delinquency date, which is the date on which you first became delinquent on making car payments to the bank or lender. For example, if you stopped making payment on January 10, 2020, your delinquency date is January 10, 2020, meaning the repo will remain on your credit report until January 10, 2027.

If a repo remains on your account after the expiration of the seven-year period, you should contact the lender to remove it or dispute it through the credit report agencies reporting the repo. If you’re able to remove a repo from your credit report, your credit score will increase by 100 to 150 points as long as you have nothing else on your credit report hurting your credit score.

Does a Voluntary Repo Have a Lesser Impact on Your Credit Score Than an Involuntary Repo?

A voluntary repo occurs when a person voluntarily surrenders his vehicle to the lender or bank. An involuntary repo occurs when the lender involuntarily picks up a person’s car and repossesses it. When it comes to the impact on your credit score, a voluntary repo and an involuntary repo have the same impact on your credit score. The damage to your credit score is the same whether you voluntarily surrender your car or it’s taken from you.

How Does the Repo Process Work?

Before a lender repossesses your car, you must be 60, 90, or 120 days late on making payments. Once you’re late on your payments, you can either voluntarily surrender your car or it will be taken from you involuntarily. After the car is taken, the lender usually sends it to the auction where it will be sold. Typically, the car is sold for less than what you owe on the vehicle. For example, you may owe $15,000 on the car and the car will be sold for $10,000, leaving you liable for the remaining $5,000.

People often believe that the car being taken from them is the end of a repossession, however, this is not the case. If the car is sold for less than what you owe, the lender will come after you for the remaining amount. In our example, the car sold for $5,000 less than what the person owed on the car. The lender will try to collect the remaining $5,000 from you. If the bank fails to collect the amount, it may sell the debt to a collection agency, and the collection agency will add a collection account to your credit report, further damaging your credit score.

Credit Score Planet Frequently Asked Questions

1) How many points will a repo take off your credit?

A repossession can take 100 to 150 points off your credit.

2) Can a repossession be removed from your credit report?

A repossession can be removed for your credit reporting by either contact the lender and negotiating its removal or by filing a dispute with the credit reporting agency. That said, it is very difficult to have a repo removed from your credit report.

3) Does a car repo affect buying a house?

Yes, a repo is a significant even on your credit report and will affect your ability to buy a house.

4) How bad does a repo hurt your credit?

A repo can hurt your credit score by 100 to 150 points.

5) How long does a repo remain on your credit for?

A repo will remain on your credit report for 7 years. It will then automatically be removed. If a repo is not removed after it expires, you can dispute it to have it removed.