How Long Do Repos Stay On Your Credit Report?
How Many Years Does Repos Ship On Credit Report?
Losing a car or any other property that was used as security to be repossessed is one of the most demanding and disturbing financial experiences. Apart from losing a valuable asset, repossession also affects your credit scores and stays on your credit report for several years. This can cause difficulties in obtaining credit, credit cards, mortgages, apartments, and other services.
Therefore, in the most basic of terms, how long will a repossession remain on your credit report? Read on to find out more.
What is a Repossession?
When you borrow to buy a big asset like a car or a boat, the lending company retains a lien on the asset until the loan is fully paid. If you fail to pay the cock as agreed in the contract the law allows the lender to seize (repossess) the collateral to recover the amount lent.
The repossession itself hurts your credit score, and the information will remain on your credit report for several years.
How long does a repo stay on the credit reports?
Repossession does not fall off your Equifax, Experian, and TransUnion credit report for seven years from the date the original repossession occurred. Unfortunately, you cannot remove accurate negative information such as a repossession early. According to the Fair Credit Reporting Act, it must remain for the full seven-year period before it will disappear from the credit reports.
The effect that it has on your scores does decline over the years though and this is within seven years. Short-term pain is much worse than long-term pain, and this also applies to repossession. However, the damage will remain visible to any lenders who may be checking your reports even as the impact gradually starts to heal.
Why Do Repossessions Stay So Long?
The reason repos stay on your reports for so long is that they are considered quite severe in terms of credit risk. Having an account repossessed is an indication that you have not been able to meet your financial responsibilities and obligations. It also made the lender recover their loss through repossessing and reselling securities that they attached to as collateral.
Even if it is not open at present, potential new lenders can see that you recently had serious credit issues. Ideally, most lenders view borrowers with a recent repossession as risky as those with no repos at all, but with an older repossession. Insurance companies may also include it in your rates for several years after the incident occurs.
Does a Repossession Expire?
Yes, repossessions do come off at some point, just like any other record on your credit report. As mentioned earlier, accurate negative information like repos must remain for the full credit reporting time limit stipulated by the FCRA. On repossessions, it is seven years.
By law, the credit bureaus must remove the information after seven years have elapsed from the date of the first repossession. Once it expires, it will be as if the repossession never occurred because your credit reports will not reflect it. Well, of course, by then you’ll likely have already been rebuilding your credit scores significantly, anyway. But it still feels good to have that black mark wiped off your record for good!
Are There Any Exceptions?
The seven-year time frame is the general rule regarding the duration that repossession companies take to delete credits from credit reports. However, there are some exceptions as to when a repossession could be removed early or take longer to be removed completely.
For instance, if a lender has not reported a repossession properly or has made some other mistake in reporting, you can ask the bureau to remove the credit mark earlier. But you would have to assure them that it is being reported inaccurately though to make them buy it.
If a repossession goes into collections afterward, it may take longer than seven years to come off your credit reports if the collection account does not. If, however, the repossession is incorporated in a consumer proposal or a bankruptcy then such procedures might lengthen the reporting period.
Ways to Monitor Your Credit Reports
Because repossessions remain on your credit for seven years, it is useful to check what your credit reports are reporting. One can never tell when inaccuracies or even errors may arise. This also means that you can check your reports now and then and see if there are any problems with them.
Any U. S. consumer can obtain one free copy of a credit report each year from the AnnualCreditReport.com website. This centralized service enables you to safely view your Equifax, Experian, and TransUnion reports online. As long as you monitor the updates and make corrections to any wrong information immediately if such exist. It is important to review your reports regularly to maintain a check on your credit health in the long run.
Building Credit after a Repossession
A repossession is undeniably hard on your pocket and the report cards; they leave a mark on your financial health. However, seven years is still enough to give you time to work on rebuilding the scores on your credit reports. Here are some tips for credit repair after having an account repossessed.
- All the other accounts should be brought current and no new late payments should be made.
- Credit card and loan balances should be paid off to lower the amount of credit utilization.
- In case of error, dispute with the credit bureaus for their removal
- Do not apply for credit too often because it can lead to too many hard inquiries
- Another option to explore is positive tradelines such as secured cards.
- Establish the recent record of timely payments
It is reassuring to know that if you try to improve other aspects, then credit may bounce back significantly even before the repossession is completely removed. It will be much less painful by the time the seven years elapse. The key thing here is to just be patiently active in repairing one's credit risk profile.
The Potential Future Impact
As a word of caution, however, do understand that once the repossession is off your reports after the seven-year mark, it will cease to weigh on your scores. But from that it does not necessarily follow that one will be able to obtain top-flight credit immediately and it is not forgotten by the lenders that it happened.
It is also important to note that some lenders may still be able to claim longer repo histories when considering the applications. These include residential and commercial mortgages, business loans, and other forms of sophisticated financing. Old repossessions just cannot negatively affect scores.
The biggest change occurs when such a repossession no longer appears on one’s credit report. But it still does not hurt to be ready for any references the lenders might wish to make to your longer credit history. It is always best to leave behind any troubled past so as not to affect the future or the new life that one builds.
Summary
It is undoubtedly stressful when an account is repossessed and causes significant harm to credit scores at first. However, repossessions are not for eternity on your credit report as a citizen. From the aspect of the Fair Credit Reporting Act, repos have to remain for 7 years after the original delinquency to become invisible.
Some may argue that seven years is a rather long time to have that particular financial mistake linger. However, it also provides you with ample chance to restore credit in the meantime. So while a repossession can stay on your credit report indefinitely, the good news is it doesn’t have to follow you forever as long as you manage your money more wisely in the future. But just don’t be a slacker when it comes to checking your credit reports and trying to fight any other lingering sources of pain.
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