If you get a repossession, then it will typically take seven years to come off your credit report. That seven year countdown will start from the date of your first missed payment that then led to the repossession.
When you finance a vehicle, the lender owns it until it is entirely paid off. The vehicle is the collateral that secures the debt to be paid.
Vehicle repossession happens when you stop making payments on your auto loan and the lender comes to physically take back your vehicle. In many cases the lender will have made several attempts to communicate with you, and collect the payment, but to no avail.
If this happens to you, and you are now worried about the security of your credit report, and your financial health, then you can always get assistance from an expert. You can also negotiate with the lender or file a dispute.
Either way you can get the repo removed under certain circumstances and when this happens you can get an increase in your credit score, fixing the loss.
The big question is, by how much will your credit score rise when you get a repo removed?
Before we talk about the increase of your credit score when you get a repossession removed, let’s first understand exactly how a credit score works.
Credit scores are basically the bread and butter for lenders, they give them the insight into you and your financial management and whether you are an ideal candidate for them to lend to.
Lenders do not like having to repossess, and so they will often accept people who have a good credit history, so they know that the person will make for a good borrower, and they will not lose money or have to go through the painstaking process of a repossession.
Before credit scores existed, lenders would physically look over each applicant’s credit report in order to determine whether they should grant them credit.
This process was time-consuming, led to mistakes, biased results and ended up with decision-making that may have actually had little to do with the applicants’ ability to repay a debt.
Today, credit scores help lenders assess the risk of lending on a much more fair scale. They are consistent and objective, and they reflect on your ability to repay debt responsibly based on past and current credit status.
The things that will most affect your credit score are things such as your total debt, the types of accounts you have, the number of late payments, and the age of your accounts.
These are all factors in your credit history that can tell you what you need to address in your credit history to become more creditworthy.
One of the factors that can absolutely decimate your credit worthiness is repossession, as a repossession can remove up to 100 or 150 points on your credit score.
If you have a repossession, then you can expect your credit score to go down by anything from 50 points to 150 points, depending on the individual case.
In the case of a repossession happening, you will get a forewarning, for the most part. Typically, the lender will contact you a few times to discuss the debt, try to collect payment and perhaps even warn you of a repossession on the horizon.
If you do not heed this, then you will likely find that the lender themselves, or someone hired by the lender, will come to repossess your vehicle.
Once this has happened, your credit will be damaged and your credit score will go down. This is always something you should wish to avoid, but if it does happen, you can try hiring a credit repair service to remove the repossession from your credit report. Doing so can save your credit score by more than 100 points.
To remove a repossession from your credit score you can either get a credit repair service, which is often the easiest course of action, you could also file a dispute if you go through your credit reports and see anything reported inaccurately about the repossession you can dispute it with the credit bureaus, or you can negotiate with the lender.
Remember, the lender will lose money when they repossess, and so paying off your debt is cheaper and more convenient to them, even if you do pay off less than you owe.
Repossessions typically take seven years to be removed from your credit report, so removing them before then is beneficial to you and your credit. Credit repair companies are the easiest way to go about this and typically the most successful.
Once your repossession has been removed, it will take time before the credit score gets updated, but you will essentially earn back the points that you lost due to the repossession, as well as any financial blemishes on your record.
This means that you can pretty much expect your credit score to go up by as much as 100 points after the repossession record is removed from your financial history successfully. As this happens, your score gets updated with it.
It depends on how many points you lost due to the repossession, some people may only lose 50, whereas others may lose 100, or 150, it depends on the individual situation. However, the idea is that you will basically make back what you lost due to the repossession once it has been wiped from the record.
Of course, the easiest thing to do is to simply avoid a repossession altogether. If you believe that you are in danger of a repossession, then you should contact your lender, to discuss the options that you have if you have fallen behind on your loan.
You could always refinance your loan, consider a voluntary surrender, and consider the state’s laws as some laws will require lenders to inform you of a repossession prior as a warning.