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Credit reports include more than records of payment history. They also include information about repossessions or foreclosures. “Repossession” is when the property is taken (legally and legally) in order to repay the debt. Failure to repay a loan can lead to repossession. If you borrow money to purchase something, the collateral you use to secure your loan payments is the item you are buying.

Let’s say, for instance, that you have taken out a loan on a car. Depending on your location, the name of the lender may still be on your title, provided you make monthly payments and haven’t paid the loan balance.

However, regardless of who is on the title, the bank can take your car if you stop paying your car payments and you still owe money for your auto loan. Recordings of major events, such as a repossession of a vehicle, can have a significant impact on your credit score. You can keep accurate negative marks on your credit report for up to seven-year, even repossessions.

There are two types of repossessions. One is voluntary, also known as surrender. The other is involuntary. Because you are trying to work with your lender to pay off what you owe, a voluntary surrender can be a better look at your credit reports. An involuntary surrender, on the other hand, makes it appear that you have broken your loan agreement.

What length of time does a repossession stay on my credit report?

The repossession will remain on your credit report for seven years from the date that you stop paying the loan balance. It can take between 30 and 60 days for your credit reports to reflect repossessions reported by lenders to credit bureaus.

Can a repossession be removed?

Is it possible to request a repossession removed from my credit report?” If it is accurate, unfortunately, no. It is impossible to remove accurate information from your credit report. However, the credit report dispute option is available to correct the errors.

Check with the three major credit bureaus (Equifax and TransUnion) to verify your debt. You may also obtain a free credit report from annualcreditreport.com once a year under federal law.

After you have your report, go through it and look for any errors. Unfortunately, reporting errors happen. One federal study found that 5% of credit reports had errors. These errors could include duplicate entries or incorrect payment dates, as well as identity theft and transposed numbers.

You can dispute any credit information that you believe is inaccurate or outdated, such as a debt that you haven’t yet paid off. The negative information will be deleted if you are successful.

If you are unable to verify the negative mark, you have two options:

  1. Goodwill deletion: Sometimes the negative mark is due out of your control. For example, you lost your job or were admitted to a hospital. You can request that the negative credit item be removed by writing a letter to your creditor. If you have paid off your debts and made on-time payments, you are more likely to succeed. Creditors are not required to honor goodwill requests because the negative item was true.
  2. You can pay for deletion: Your creditor might be willing to remove the negative credit mark from your credit history. It is likely that you will either have to pay off the entire amount or a reduced amount. Ask your creditor to make a written agreement.

What does repossession do to your credit score?

A credit score is influenced by many factors. VantageScore is the most popular credit-scoring entity, followed by FICO(r), the Fair Isaac Corporation that produces the FICO score.

FICO scores can range from 300 to 800 and are broken down into five categories: exceptional (800-885), very good (740-799), excellent (670-739), good (580-739), fair (580-699), or very poor (300-579). FICO uses five weighted factors to calculate your score. 35% of the score is based on your payment history.

Late payments are more damaging to your credit score than any other factor. A repossession can also occur after several missed payments. This can be especially damaging to your credit score.

Not only will a repossession be noted on your credit report but the following could also contribute to negative marks.

Late payments

  • Each missed payment of 29 days or more will result in a negative credit score. This can reflect poorly on your credit score.
  • Your credit score will be affected by your overall credit score and how late you are.
  • The impact of poor credit may not be as severe if you have already suffered from it.
  • You will see a bigger drop in your credit score if you have good credit and only one late payment.


  • An account will be considered delinquent until the borrower pays the outstanding amount and any fees or charges that result from the delinquency. After three to six months of non-payment, a loan will be declared default if the borrower fails to make multiple payments. Delays are less serious than defaulting.


  • When a borrower defaults on a loan, it means that they are not paying their payments. This can happen after being delinquent for three to six consecutive months. The borrower who defaults on the loan will be responsible for not paying back the amount due to their inability to repay it.
  • Credit history will be negatively affected if defaults are considered more serious than they should be.


  • Lenders report collection accounts and transfer your account to a collection agent if you are in default for more than six months. Lenders charge off the debt. It doesn’t go away. You owe the collection agency, not the original creditor.
  • If the amount of debt is significant, this can negatively impact credit scores.
  • Credit scores should not be negatively affected by smaller debts (less than $100).

A credit history that is more recent than previous credit history will be weighed. Paying on time is the best way to pay student loans, auto loans, or personal loans.

Good news: The longer the repossession occurred in the past, the lower your credit score should be. If you use credit responsibly, the positive information should outweigh any negative.

What can you do to rebuild your credit following a repossession?

You can still rebuild your credit even after a repossession. It’s important to note the difference between these two types of processes. Credit repair is the process of removing inaccurate information from your credit reports. Rebuilding your credit is the opposite. It involves taking steps to improve your credit score. Credit can be built by:

  1. Your credit score: To ensure that you are current on your payments and guard against mistakes, it is important to check your credit regularly. FICO offers a free credit score that will help you track your progress.
  2. Paying on time: This is the best proactive step you can make to achieve results.
  3. Reduce your debt: Your credit utilization ratio, which is the amount of debt that you have compared to your credit limit, can be reduced by paying down your debt. Paying off debt can help build credit because 30% of your credit score is determined by the amount of debt that you have.

It is also a smart idea to not apply for new credit. A hard inquiry is an additional credit check to your credit report for every application for credit. Hard inquiries are when a lender examines your credit report in order to decide whether or not to lend you money. A hard inquiry can reduce your credit score by a few points. A repo will likely leave you with poor credit scores so an application for credit extension is unlikely to succeed.

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The bottom line

Auto lenders won’t repossess your vehicle. They’d rather make a profit so they don’t repossess it. This makes repossessions even more damaging to your credit.

Repossessions can damage your credit score. This shows that you have been neglecting your payments for so long that the lender has given up on trying to collect what you owe. Instead, the lender took the collateral (such as a vehicle) back.

You may have difficulty getting a loan or credit card after repossession. If you are successful, however, you might face higher interest rates.

A repossession would not be removed from your credit history unless it had been mistakenly added. It will take seven years to remove the repossession from your credit reports. However, it will have a smaller impact on your credit score with time.

The best thing to do in the interim is to look toward the future. You can get your finances in order by improving your credit score, making on-time payments, and keeping your credit cards low. Also, be diligent in monitoring your credit. Although it won’t happen overnight it is possible to rebuild your credit so that it is available when you need it.

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