How Long Does A Repo Stay On Your Credit Report?

Should you have ever had your home, automobile, or any other expensive stuff taken back, you may be eager to find the length of the repo on your credit record and how it would affect your credit score. Although taking repossessions might seriously damage your credit, the unfavorable comment won't stay on your credit reports. Here is what you should be aware of about the length of time a repo stays on your credit report until it is deleted.

What is a Repo?

Repossession, often known as a repo, is the process whereby the owner of a credit-based purchase—such as an appliance or a car—takes possession of the property. Many times, this results from many months of unpaid bills. Legal entitlement to seize the object belongs thereafter to the lender until the loan's remaining amount is paid. One of the worst things you could do to your credit is to have an account reported to collections or repossession.

How Long Do Repos Stay on Your Credit Reports?

Repossessions will be contained in your repository from the three credit agencies, Experian, Equifax, and Trans Union. The FCRA specifies that negative credit information such as repos can be reported on your credit report for up to 7 years starting from the time the event was reported. Specifically for repossessions:

• Equifax: A repossession will remain on your Equifax credit report for up to 7 years from the initial time that you missed the payment towards the car.
• Experian: Experience states that with Experian, a repossession can linger for 7 years from when the account in question became delinquent which was before the car repossession.
• TransUnion: Repossessions are reported to the TransUnion credit bureau and they take 7 years from the first missed payment.

Credit reporting agencies Equifax, Experian, and TransUnion will report repo on your credit report for seven years, but the seven-year period begins on different dates at the three bureaus.

However, it should be stressed here that neither disputing erroneous entries in your credit reports nor contacting the creditors to have the repossession deleted will allow you to get rid of this negative item earlier. If you want to enhance your credit score, the best thing is to wait for 7 years until it disappears on its own. Of course, not adding any more negatives and trying to keep building more positives on the payment history will also help to recover from the repossession in the long run.

Is a Repo on Your Credit Report for 10 Years?

You might have read or someone told you that repos can stay on your credit reports for up to 10 years. However, this ten-year period only relates to Chapter 7 and Chapter 13 bankruptcies, not repossessions. The Fair Credit Reporting Act also provides a maximum time line which does not allow items to remain on the credit report forever.

Regardless of what a lender or dealer may claim, repossessions and most other negative credit data and late payments can only be reported for up to 7 years before they must be removed. Any credit history regardless of its source older than this period should be investigated and if found to be erroneous, it should be disputed.

What Are the Effects of a Repossession on Your Credit?

Knowing fully well that if you cannot pay your monthly installments, your car or any other property that you have financed will be repossessed and sold at an auction is going to affect your credit score. However, how much of an impact it has will depend on the previous credit history that you have posted. Even those who have a constructive credit history may lose between 140 to 240 points if a repossession occurs. Of course, if you already have a fair or poor credit standing, the impact may not be as deep. Other contributing factors include:

• Type and Number of Other Negative Marks: If the repo is one of the few or only negatives, the hit will be higher compared to those who have several late payments or collection accounts on their credit report.
• Time Since Delinquency Leading to Repo: In general, if the repo happened more than a year ago then its value will be slightly less than a repo that happened recently.
• Remaining Length on Credit Reports: Borrowers financially damaged by mortgage repossessions in the initial 1-2 years of the seven years suffered more than borrowers with repossessions in year 6 and beyond.
• Credit Profile and Mix of Accounts: Individuals with positive open accounts, such as mortgages and credit cards that are not delinquent, are likely to score higher, hence a repo has a higher latitude to plunge. This is a reflection of the fact that people with little credit history experience a relatively small change in their score.

Similar to other bad credit data, the more time that will elapse after the repossession, combined with paying your other accounts on time and in order, will gradually reduce the effects of the repossession. There will also be score improvement if no other negatives are incurred as well as paying bills on time and having low credit card balances. But in real life, you will have to wait until it comes off your credit reports to regain your lost points.

How to Rebuild Credit after Repo?

Losing your car through repossession is one of the most stressful situations one can encounter, embarrassing and costly. It stings – feeling the loss of your property, your credit score being reduced, and having a remaining balance on your property even after the auction sale fees, among others. Here are some essential steps to rebuild credit in the aftermath.

• Pay Remaining Balance: If there is any balance remaining that is to be paid in full, check with the servicer or lender. In any case, the law still holds you to pay for the amount that was not recovered in the sale. Some states permit creditors to recover the balance through collections or legal means if it is not paid.
• Obtain Credit Reports: Access your credit reports from Experian, Equifax, and TransUnion to check on the repossession entry and new credit scores. You will also want to review reports going forward to make sure as you work on rebuilding credit.
• Deal Directly with Original Lender: If the remaining deficiency balance was sold to an outside debt collector agency, then there is a need to try to negotiate directly with the original creditor. Perhaps there are other ways to pay up the total owed or agree on how to make smaller and more manageable payment plans.
• Request Goodwill Deletion: Some of the lenders may offer to delete the repossession upon payment of the remaining balance that the borrower owes. Ensure that any potential deletion agreement promises are in writing before making the payment.
• Improve Credit History Mix: Apply for new responsible credit if necessary such as a secured credit card or credit card with a co-signer to increase positive credit history. It is also important to pay the charges by the due dates as well as to maintain low balances. Another option is to obtain an authorized user status on a spouse or a family member’s positive credit account.
• Repair Credit Over Time: The most effective way to counter the effects of 7-year repossession damage is to let time pass. Pay more attention to the stability of the monthly payments and do not apply for credit frequently to avoid fluctuations. Other good marks create history to increase your numbers once more as the repossession grows older.

Undoubtedly, having an auto repossession is a very awkward situation. But take comfort that it is not the end of being able to rent an apartment, qualify for another car loan, or rebuild credit in the coming years. Just forget about the repossession and go back to the basics of financial management and the repossession will be erased from your credit history in a jiffy.

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