A repossession can stay on your credit reports for many years, and even impact your ability to get another car loan for a while.
Repossession on Your Credit Reports
A vehicle repossession on your credit reports for up to seven years and can be devastating to your credit reports. Within the first year after the repo, traditional and subprime lenders alike may not be willing to approve you for an auto loan.
Repossession is typically the result of a default on a car loan, which is usually due to missed payments. Some lenders may even start the repossession process once you’re a day late on your car payment. Missed and late payments also remain on your credit reports for up to seven years.
However, credit reports do heal. Over time, the negative impact of a repossession lessens. After 12 months, you have a better chance of qualifying for a car loan if you’ve avoided any other big negative marks on your credit reports after the repo.
Since repossession lowers your credit score, it can make getting a car loan more difficult. You may need to look into alternate loan options than you're used to, or work to build your credit before getting another car loan.
If you’re about to face a repossession, talk to your auto lender immediately. You’re at more of an advantage if you haven’t missed any car payments yet, since you can try for a loan deferment, which pauses your payments for a limited period (typically up to three months).
Can I Remove a Repo From My Credit Reports?
To remove something from your credit reports, it almost always needs to be put there by mistake. If you have a repo reported that didn’t happen, then contact the credit bureau reporting the repossession and the creditor that mistakenly reported it.
Removing a mistake from your credit report is done through a dispute. All three major credit reporting agencies allow for online disputing. The credit bureau has 30 days to investigate, and may require you to submit proof that the reporting action is incorrect. In the case of a vehicle repo that never happened, it could mean submitting proof that you’re current on the loan and/or still have possession of the vehicle.
Mistakes can happen on credit reports, and it’s more common than you may have guessed. According to a Consumer Reports investigation, about one-third (or 34%) of Americans have at least one mistake on their credit report.
If the vehicle repossession isn’t a mistake, then it’s going to stick around for a while. However, it’s still a good idea to comb through your credit reports and make sure they’re accurate. Right now, you can request a copy of your credit reports every week, for free, until April 2022. Visit www.annualcreditreport.com to request your credit reports. After April 2022, weekly access ends and it resumes to once a year, so take advantage of this access.
Getting Another Car Loan After Repossession
There are some dealerships that don’t check your credit reports, so a recent repo wouldn’t impact your ability to qualify for a car loan. Buy here pay here dealers are known for skipping the credit check and may be a good option to explore if you have a repo that’s less than 12 months old.
If your repossession is over a year old, then subprime financing may be another option to check out. Subprime auto lenders are signed up with special finance dealerships, and they assist borrowers with tarnished credit histories. If you can meet their requirements, then your credit score isn’t the most important part of your auto loan eligibility.
Here at Auto Credit Express, we aim to make the car shopping process easier for borrowers with credit challenges. Using our nationwide network of special finance dealerships, we can look for a dealer in your area that has bad credit lending resources. Fill out our free auto loan request form to get started!