When buying a vehicle, whether new or used, most people need to use some degree of financing to secure the purchase. This is incredibly common and results in the buyer committing to making a periodic car payment on the balance owed. If too many payments are missed and there are no efforts to bring the account current, the lender may choose to enforce their right to repossess the vehicle, which can have a severe and long-lasting effect on your credit.
If you have had repossession action against you, the negative credit report item will remain on your report for a total of 7 years. The 7-year timer begins from the date of the first missed payment, and after 84 months the initial repossession item will age off the report.
While a vehicle repossession will stay on your credit report for 7 years, there are other ways that it may be able to impact your credit for even longer. Not only will it drop your credit score considerably, but you may see credit items related to that repossession linger for much longer than the first 7 years. Let's take a closer look at just how long a repo will stay on your credit report for, and what you can do to fix it or adapt.
How Long Does A Repo Stay On Your Credit Report
If you are late with a payment once or twice but manage to bring your account back into good standing and keep it current, the late payments will be recorded on your credit report for 84 months or 7 years. However, this doesn't necessarily mean that you are out of the woods. Depending on how long the term of your vehicle loan is for, you may be looking at having your credit affected for 10 years or more.
For example, if you finance your car with a 7-year loan, that's 84 months that you need to make your payments on time and in full, which most people can do for a while. However, if something happens during that first year and you have a late or missed payment that requires you to get caught up on, that late or missed payment will be recorded in the payment history for that account and will remain there for a full year after you finish paying off the car. That means the account will be on your credit report, in one form or another, for a total of 8 years.
Using that same hypothetical situation, if you financed a new vehicle for the same 7-year term, and make all of your payments on time for the first 6 years you have a substantial payment history established. However, if in the final year of the loan you miss several payments and subsequently have the vehicle repossessed, you'll then have a negative credit item for 7 years after the missed payments. This is in addition to having the loan account on your history for 6 years before the missed payments.
When Does A Repo Fall Off Credit
If you miss enough payments or are late enough that your lender begins repossession efforts, things can go from bad to worse. Not only will you have the payments to catch up on, but if the lender or dealer does repossess your vehicle, then you will have a much more difficult time working or maintaining consistent employment and income to get the vehicle back or another in its place.
If the account has no other delinquent payments in the payment history, the status will be listed as positive. Positive accounts will stay on your account for 10 years from the date of account closure, or indefinitely if the account is kept open. This means if the repossession was successful and the account was therefore never brought current, the entire account will remain on your credit 7 years from the first late or missed payment. For those with a relatively limited credit history or even an extensive history with minor damage, this can be devastating to their credit report and their credit score in particular.
How Long Does A Repo Affect Your Credit
How long a repo will affect your credit will greatly depend on your credit situation and income at the time of the repo, and in the time shortly afterward. If you have a relatively strong credit report to begin with, that will help cushion the blow a bit, but it won't be able to prevent all potential negative impact. Additionally, if you have enough disposable income you may be able to recover quicker from the damage that does occur.
Since a repo will stay on your credit for 7 years from the first missed payment, you probably won't be able to go house shopping anytime sooner than that, but you can probably use other financial tools to pad your credit report and dilute the damage. Increasing your credit limits across all credit cards you have, while maintaining balances that are equal to or less than what they were prior, can make your credit utilization look much better. As always, be sure you are making all of your monthly payments on time, every time, for anything that reports to the credit bureaus.
How To Remove A Repo From Your Credit Report
Repos often happen in one of two ways, either voluntarily or involuntarily. While the lender is going to take your vehicle in either case, agreeing to a voluntary surrender can often help you maintain some control over the process as well as the results, while also preventing additional repo or recovery fees that may be charged to you as a result of an involuntary repossession. In both cases, your credit will still be damaged for quite some time.
There are commonly two different ways to get a repo removed from your credit report, you can do it yourself, or you can use a reputable credit repair service. If you use a service it will probably cost you several hundred dollars or more, depending on what other items are on your credit report, since in most cases, you'll be paying a percentage of the value of the items being cleared.
If you want to try to clear the item yourself, there are generally two ways to do that, you can either negotiate a deal to pay for clearing the negative credit item, or you can comb through the pertinent details to try and find something that would be grounds for a dispute.
If you negotiate a settlement with the debt owner, you will need the funds to hold up your end of whatever deal you strike, but in return, you can often get the item removed from the report entirely once paid. You may need to talk to someone that has enough authority to offer you a pay-for-remove deal, but once you do be sure you get the deal in writing before you begin paying anything.
If you would rather try to dispute the account, you'll need to find an error or recordkeeping blunder by the lender or their affiliates. You will need to find some form of inaccuracy in all factors of your account. You'll need to comb through all of your payment dates, various balances that you have been given, account numbers, and anything else with the potential to have been recorded incorrectly. If you find an error, you'll be able to report the inaccuracy by filing a dispute, after which the bureau will have 30 days to verify your claim, and if it cannot verify the accuracy of the info. If errors have been verified, the bureau will need to correct or remove the item.
Do You Still Owe After A Repo?
If your vehicle has been repossessed by the dealer or lender, there is a chance that you'll still owe money on it, and repossession does not absolve you of the debt. When your lender repossesses your vehicle, it will then often be sold at an auction to try and recover the value of the vehicle. If the value obtained at auction is less than what was owed at the time of the repo, you may end up owing what's called a "deficiency balance".
If your vehicle has not yet been repossessed, you may be able to avoid a potential deficiency. In some cases, your lender may agree to what is called "contract reinstatement," which will allow you to regain possession of your vehicle, potentially selling it for much more than the bank likely would have. Meaning you'll owe less in the end.
Understanding How Long A Repo Stays On Your Credit Report Is Important
If you've missed a few payments and are in danger of having your vehicle repossessed, or if you've already lost the vehicle to a repo and are trying to pick up the pieces, being aware of how long that repo is going to remain on your credit report is vital. Knowing how long you'll need to deal with the credit blemish may be the incentive to catch up on your missed payments with some creative funding, or it can help to know how long you still have to wait for a long-passed repo to fall off your report and let you get on with rebuilding your credit.
When buying a vehicle, whether new or used, most people need to use some degree of financing to secure the purchase. This is incredibly common and results in the buyer committing to making a periodic car payment on the balance owed. If too many payments are missed, and there are no efforts to bring the account current, the lender may choose to enforce their right to repossess the vehicle, which can have a severe and long-lasting effect on your credit.
If you have had repossession action against you, the negative credit report item will remain on your report for a total of 7 years. The 7-year timer begins from the date of the first missed payment, and after 84 months, the initial repossession item will age off the report.
While a vehicle repossession will stay on your credit report for 7 years, there are other ways that it may be able to impact your credit for even longer. Not only will it drop your credit score considerably, but you may see credit items related to that repossession linger for much longer than the first 7 years. Let's take a closer look at just how long a repo will stay on your credit report for, and what you can do to fix it or adapt.
How Long Does A Repo Stay On Your Credit Report
If you are late with a payment once or twice but manage to bring your account back into good standing and keep it current, the late payments will be recorded on your credit report for 84 months or 7 years. However, this doesn't necessarily mean that you are out of the woods. Depending on how long the term of your vehicle loan is for, you may be looking at having your credit affected for 10 years or more.
For example, if you finance your car with a 7-year loan, that's 84 months that you need to make your payments on time and in full, which most people can do for a while. However, if something happens during that first year and you have a late or missed payment that requires you to get caught up on, that late or missed payment will be recorded in the payment history for that account and will remain there for a full year after you finish paying off the car. That means the account will be on your credit report, in one form or another, for a total of 8 years.
Using that same hypothetical situation, if you financed a new vehicle for the same 7-year term, and make all of your payments on time for the first 6 years you have a substantial payment history established. However, if in the final year of the loan you miss several payments and subsequently have the vehicle repossessed, you'll then have a negative credit item for 7 years after the missed payments. This is in addition to having the loan account on your history for 6 years before the missed payments.
When Does A Repo Fall Off Credit
If you miss enough payments or are late enough that your lender begins repossession efforts, things can go from bad to worse. Not only will you have the payments to catch up on, but if the lender or dealer does repossess your vehicle, then you will have a much more difficult time working or maintaining consistent employment and income to get the vehicle back or another in its place.
If the account has no other delinquent payments in the payment history, the status will be listed as positive. Positive accounts will stay on your account for 10 years from the date of account closure, or indefinitely if the account is kept open. This means if the repossession was successful and the account was therefore never brought current, the entire account will remain on your credit 7 years from the first late or missed payment. For those with a relatively limited credit history or even an extensive history with minor damage, this can be devastating to their credit report and their credit score in particular.
How Long Does A Repo Affect Your Credit
How long a repo will affect your credit will greatly depend on your credit situation and income at the time of the repo, and in the time shortly afterward. If you have a relatively strong credit report to begin with, that will help cushion the blow a bit, but it won't be able to prevent all potential negative impact. Additionally, if you have enough disposable income you may be able to recover quicker from the damage that does occur.
Since a repo will stay on your credit for 7 years from the first missed payment, you probably won't be able to go house shopping anytime sooner than that, but you can probably use other financial tools to pad your credit report and dilute the damage. Increasing your credit limits across all credit cards you have, while maintaining balances that are equal to or less than what they were prior, can make your credit utilization look much better. As always, be sure you are making all of your monthly payments on time, every time, for anything that reports to the credit bureaus.
How To Remove A Repo From Your Credit Report
Repos often happen in one of two ways, either voluntarily or involuntarily. While the lender is going to take your vehicle in either case, agreeing to a voluntary surrender can often help you maintain some control over the process as well as the results, while also preventing additional repo or recovery fees that may be charged to you as a result of an involuntary repossession. In both cases, your credit will still be damaged for quite some time.
There are commonly two different ways to get a repo removed from your credit report, you can do it yourself, or you can use a reputable credit repair service. If you use a service it will probably cost you several hundred dollars or more, depending on what other items are on your credit report, since in most cases, you'll be paying a percentage of the value of the items being cleared.
If you want to try to clear the item yourself, there are generally two ways to do that, you can either negotiate a deal to pay for clearing the negative credit item, or you can comb through the pertinent details to try and find something that would be grounds for a dispute.
If you negotiate a settlement with the debt owner, you will need the funds to hold up your end of whatever deal you strike, but in return, you can often get the item removed from the report entirely once paid. You may need to talk to someone that has enough authority to offer you a pay-for-remove deal, but once you do be sure you get the deal in writing before you begin paying anything.
If you would rather try to dispute the account, you'll need to find an error or recordkeeping blunder by the lender or their affiliates. You will need to find some form of inaccuracy in all factors of your account. You'll need to comb through all of your payment dates, various balances that you have been given, account numbers, and anything else with the potential to have been recorded incorrectly. If you find an error, you'll be able to report the inaccuracy by filing a dispute, after which the bureau will have 30 days to verify your claim, and if it cannot verify the accuracy of the info. If errors have been verified, the bureau will need to correct or remove the item.
Do You Still Owe After A Repo?
If your vehicle has been repossessed by the dealer or lender, there is a chance that you'll still owe money on it, and repossession does not absolve you of the debt. When your lender repossesses your vehicle, it will then often be sold at an auction to try and recover the value of the vehicle. If the value obtained at auction is less than what was owed at the time of the repo, you may end up owing what's called a "deficiency balance".
If your vehicle has not yet been repossessed, you may be able to avoid a potential deficiency. In some cases your lender may agree to what is called "contract reinstatement" which will allow you to regain possession of your vehicle, potentially selling it for much more than the bank likely would have. Meaning you'll owe less in the end.
Understanding How Long A Repo Stays On Your Credit Report Is Important
If you've missed a few payments and are in danger of having your vehicle repossessed, or if you've already lost the vehicle to a repo and are trying to pick up the pieces, being aware of how long that repo is going to remain on your credit report is vital. Knowing how long you'll need to deal with the credit blemish may be the incentive to catch up on your missed payments with some creative funding, or it can help to know how long you still have to wait for a long-passed repo to fall off your report and let you get on with rebuilding your credit.
Keep reading: What Happens If You Falsely Dispute a Credit Card Charge?
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.