How Long Does Repo Stay On Credit?

It is difficult and stressful to lose your car if it was repossessed or to lose your home through foreclosure. Apart from the loss of your property by force, repossession also hurts your credit score and credit report meaning that when you wish to be financed the results will not be pleasing or you will be given ahigher interest rates So just how long will a repo stay on your credit report and your ability to obtain new credit? Let me tell you something.

The Basics of Repossession

First, let me explain what repossession is. Repossession happens when you fail to make payments for goods that were bought on credit with the help of a loan such as automobiles, boats, recreational vehicles, or even a house through foreclosure. Eventually, the lender will employ a collection agency that will physically come to take some of the items, in a bid to recover part of the money from the debt.

This goes on your credit report and will do much harm to your credit score lenders depend on in determining your creditworthiness and risk level as a borrower. Thus, the higher the score, the more favorable the interest rates and the chances of approval for credit products.

In the previous sections, we learned how long repo stays on credit reports from the type of account.

Alright, so back to the main question – how many years does a repossession remain on your credit report? The answer is that a repo can remain on your Equifax, Experian, and TransUnion credit reports for up to seven years from the time it is initially reported.

However, the period of 7 years is the maximum, but the effect on the score is somewhat less after the time. The largest increase in traffic occurs within the initial two years of a website’s existence. After 2 years or so, you can begin to rebuild some of the points if you are paying your bills on time on other credit accounts. However, a car or home repossession will be a disadvantage when seeking to get affordable financing for quite some time.

Is it possible to get a repo removed?

Is there a way to get a repossession removed from credit reports earlier? Sadly, the choices available are quite limited. Because the repossession is practically a true account of a default in payment, the credit bureaus are normally not able to, or inclined, erase accurate information that would negatively affect your score.

The only way that you can try to get rid of repossession is if you can find something wrong with reporting such as the wrong repossession date or amount. Then, in that case, you will need to write to the credit bureau to possibly have it removed or corrected. However, many people will not observe distinct logical errors with repo entries.

Repo or Foreclosure – Which One Hurts More?

When given a choice between having your home foreclosed on or your vehicle repossessed, which ding is worse on credit? On paper, foreclosure is usually seen as being worse, the score hit ranges from 85-160 points while a repo ranges from 100-140 points. But both are very bad signs that will pull down most people’s performances.

Rebuilding Credit After Repossession The good news is that if you stick with a positive payment history, other credit accounts, fewer new credit inquiries, and responsible use of credit, then it is fairly easy to bounce back after a couple of years. Here are some additional tips for bouncing back after a damaging repossession.

• Pay off past due credit accounts- If you have defaulted on some credit card balances or other loans, first ensure that these are settled and not in arrears.
• Reduce balances – Credit utilization also has an impact on credit scores, aim to reduce balances on cards and loans as soon as possible.
• Do not apply for new credit – This can also be damaging to score rebuilding for at least 12-24 months.
• Add positive info – After a year or so, one may add a positive account such as a well-managed credit card or a secured loan.
• Monitor your credit – Make it a habit to monitor your credit at least once every 4-6 months for any inconsistencies.

The error in the financial management of having property repossessed may be huge but don’t be discouraged as it is not the end of the world or the destruction of credit. In other words, be patient, and show responsibility over time, and the scores will come back. All you can do is prepare for it to remain on your credit history for the standard period of 7 years.