How Bad Does A Car Repo Hurt Your Credit?

Dealing with car repossessions can be one of the most stressful and embarrassing moments of anyone’s life. In addition to losing your car, repossession also hurts your credit score as well. But how far is a car repo going to affect your credit rating though?

Sadly, the effect of a car repossession on your credit score is quite drastic. The moment the lender repossesses your car, they will report the repossession to the three credit bureaus – Equifax, Experian, and TransUnion. This report will appear in your credit history and will bring down your credit score right away.

The Extent of Harm Caused by a Car Repossession

Many individuals undervalue the harm a repossession does to credit until they run the scores. Generally speaking, an automobile repossession will lower a credit score by up to 150 points; nonetheless, this will depend on the credit bureau utilized. For example, should your given score be 680 and you find yourself facing a repo, the score can decrease to 530 at the lowest. This is a quite significant decline.

The main harm is done as vehicle repo is acknowledged as the biggest and most serious delinquency that may show up on the credit record. It is evidence to other creditors that you are a very reckless borrower who failed to pay off a previous loan. Repossession will be seen by banks and other financial institutions, who will most likely reject your credit or loans as they will not want any risks.

What Is the Length of Time That Car Repossession Takes Before One’s Credit Is Restored?

Most consumers who receive a repossession notice are left wondering the period that the same will be reflected in their credit report. However, similar to most other adverse credit reports, car repossession does not disappear from your credit report for 7 years from the time of occurrence.

This means that throughout the entire 7 years, anyone who conducts credit checks before extending credit, renting, or offering a job will easily find out about the repossession and your poor credit score. It can cause considerable detriment to your fiscal life, and this can last for several years, although it is eventually removed from your reports.

Is it possible to erase car repossession from your credit report?

As you may know, being haunted by a repossession for such a long time could be quite irritating, and this leads many individuals to ask whether one can get a car repo removed from credit reports. It is almost impossible to eliminate an actual legitimate repossession. In general, the credit bureaus can only delete information that is false, misleading, outdated, or cannot be verified. If your vehicle was indeed repossessed legally because of non-payment, then the creditors are correct in reporting this accurate information.

With that said, if there were any errors or disputes regarding the repo, for example, you thought that payments were made on time or the repo was unlawful, you do have the right to appeal the repossession reporting. It is also important that you forward your arguments to the credit bureaus together with evidence of your claims. If one can prove inconsistencies concerning the repossession, that is when it might be possible to get it off the credit reports.

Ways on How to Rebuild Your Credit After Car Repossession

The good news is that while a repossession will take its toll on your scores, your credit is not ruined for good. The most important thing is to know what exactly needs to be done to begin the process of credit repair as soon as possible. Here are some tips for improving your credit even after a car repo.

Get a copy of your credit reports – It is wise to start with obtaining your free credit report from AnnualCreditReport. Come each year to get the full picture of your credit status. Pay particular attention to the repossession details and make sure that they do not contain any mistake.
Clear any balance on a car loan – It is advisable to clear any remaining balance on a car loan or deficiency balance in case the car was auctioned to pay the loan balance. The $0 balance appears to be better and indicates that the debtor at some point paid the money that was due.
Get creditors to remove the negative item upon paying for that amount - This is one of the quickest methods to delete a negative item in your credit report since the reporting creditor (lender, collection agency, etc) agrees to delete the negative item after payment in full. Some may be willing because they are most concerned with getting paid. Ensure that any pay-for-delete agreement is first put down in writing.
Send goodwill letters – Goodwill letters are letters of apology to your creditors explaining why you have failed to make your payments in time and seeking their goodwill to have the negative item removed from your credit report. This may not always guarantee success but it has assisted many individuals in deleting unwanted information.
Do not have any new late payments - It is important to ensure that all other credit payments are made on time in the future. Late payments during the credit rebuilding period can still lower your scores even if it’s just a day behind.
Reduce overall credit card use - Aim to reduce overall credit card balances below 30% of the total credit limit on each card. This step alone can give a significant increase in scores because the credit utilization ratio is an important factor affecting credit scores.
Authorized user – Getting listed as an authorized user on a spouse/family/friend’s credit card account with a good payment history can also help to build credit history and raise credit scores much faster.
Get a handle on new credit – New accounts and hard credit inquiries can also cost points so don’t apply for a lot of new credit in a short amount of time. It can also be self-defeating to open too many new accounts because it makes you look risky to lenders. There should be some period between the new application.
Credit Watch – Enter into credit monitoring services so that you can check for changes in your credit files and report any discrepancies. It also makes you aware of any instances of identity theft and this is crucial during the rebuilding phase.

Recovering From Repossession Duration

You should prepare to take about 18-24 months to see some progress after car repossession if you are strictly following all the measures that need to be taken in the credit repair business. But as you begin the process of rebuilding as soon as the repo, you should expect to have gradual improvement with time. If you keep having financial issues, the recovery time may take longer. However, if you can act responsibly and manage your credit well, then your scores could be back to what they were before the repossession in a few years.

The main message is, that no matter how much you may get irritated by having your car repossessed, do not lose hope. While knowing what exactly happened to your credit score is the first step, the second step is to act to start the process of repairing your damaged credit. Over some time, the impact is reversed; you can come from a situation of repossession credit damage to having strong scores once more

Ready to boost your credit score? Call +1 888-804-0104 now for the best credit repair services near you! Our expert team is here to help you achieve financial freedom and improve your credit. Don't wait—get started today!.