A strong credit score can give consumers several important financial advantages, like higher approval rates, access to more options, and lower interest rates.
However, keeping good credit is not an easy task.
Most borrowers never intend on falling behind on their loans, yet sometimes they miss one, two, three, or even more payments. In most cases, when a borrower misses multuple payments on a car loan, the car is getting repossessed, and that can be a major blow to the borrower’s credit.
If you are looking for more information about removing a repossession from a credit report, feel free to check out the guide below and consider your options.
What Is Repossession of Property?
Repossession, commonly known as a repo, is a process in which a creditor retakes the ownership of a property because the debtor is unable to pay it. In some cases, when the debtor is aware that they can no longer afford the property, they may return it of their own volition. This process is also known as voluntary surrender.
Whether voluntary or involuntary, repossession can stay on your credit report and negatively affect your credit score for up to seven years.
How Can a Repo Affect Your Credit Score?
Every item on your credit report affects your credit score, either positively or negatively. Having a repo on your credit score indicates poor financial judgment and management, so naturally, its impact will be negative.
Even if you decided to voluntary surrender the property, the fact that you were unable to pay off your debt remains, so the impact will be similar to a nonvoluntary repossession.
Is Getting Repo off Credit Report Possible?
In accordance with the Fair Credit Reporting Act, consumer reporting agencies can report negative items on a credit report for up to seven years. The only way to remove a repo from your credit report earlier is to try and mend things with your creditor.
Most creditors try to get the repossessed properties resold at an auction for a fraction of the original price. In other words, they are losing money on them. For this reason, you can try to negotiate to pay off some of your debt, and get them to not report the repossession in return, even though you will pay less than you owe.
It is important to point out that credit reporting is optional for creditors. They can decide whether or not they will report your repo and even have the power to get credit bureaus to delete an already existing repo from your report, if you convince them to do it.
As you can see, this is not a guaranteed repo removal trick, but it is the only thing you can do when the repo in your credit report is valid.
On the other hand, if you believe that the repo on your report is fraudulent, outdated, or inaccurate in any other way, you can try to get it removed from your report by disputing it.
How to Get a Repo off Your Credit
If you receive a credit report showing a repossession of property that you consider to be invalid, you need to dispute it with the credit bureau that created the report. You can get a free copy of your credit report from each of the three major credit bureaus in the US once every 12 months. Contact the bureau that reported the repo and request your free copy.
If multiple bureaus have reported the repo, contact all of them, as you will need to dispute it with every bureau individually.
To dispute and remove the remove repossession from your credit report, you will need to gather information and documentation that you can use as evidence that the repo on your report is inaccurate. Then create a copy of the report and highlight the incorrect information. Finally, write a letter in which you will clearly state that you are filing a dispute against a claim in your report and explain what information you believe to be inaccurate and why you believe it is wrong.
Now you can send everything together to the credit bureau that reported the invalid repossession.
Credit repair facts reveal that the bureau has between 30 and 45 days to investigate your dispute. In this time, the bureau will try to contact the creditor who reported the repossession to the bureau in the first place.
If the creditor does not respond, or doesn’t provide the necessary evidence, the repo will be removed from your credit report.
However, if the credit bureau decides that the repo is valid, it will stay on your report.
Improving Your Credit Score After Dealing With a Repo
Getting a repo off your credit report can notably improve your credit score, but you can take plenty of other steps to repair your credit. For example, you can examine the credit report and look for other errors that may negatively impact your credit score and dispute them as well.
Even if you are unable to get repossession of your credit report, there are still a few techniques and best practices that will help you improve your credit score, like:
- Paying bills on time
- Paying off debt strategically
- Improving your spending habits
that can help you build and maintain good credit.
The Bottom Line
Unfortunately, the options for getting a repo off a credit report when a property has really been repossessed are very limited. Even hiring a credit repair company won’t improve the situation as there is simply not much you can do.
Negotiation and reaching an agreement with the creditor who did the repossession is the only solution, though it is far from a guaranteed repo removal method.
However, if you believe the repossession of property on your credit report is invalid, you can file a dispute with the credit bureau that created the report. If you provide the necessary evidence that the repo is, in fact, inaccurate, there is a good chance that the bureau will remove the repo from your credit report.
FAQs
How long does a repo stay on your credit?
A repo can stay on your credit report for up to seven years, from the moment your late payment has been past due for exactly 180 days.
Can you buy a house with a car repossession on your credit report?
While it is not impossible to get the right financing for buying a house or a car, a repo in your credit report can definitely make things more difficult.
Does a repossession hurt your credit if you get the car back?
Paying off your car debt will improve things as at least your loan will be current, but the repo will remain on your credit report and hurt your credit score.
