Unless the information is incorrect, a repossession – whether it’s been redeemed or not – stays on your credit reports for up to seven years, according to Experian. In order to get a redeemed repossession off your credit reports, you need to wait those seven years or identity an error regarding the data that you can dispute with the credit bureaus. Disputing an error is rather simple, and we’re here to explain it.
How to Remove a Repossession from Your Credit Reports
When you redeem your car, you pay off the loan. The repossession is still listed on your credit reports, typically with something along the lines of "paid as agreed" next to it. However, the repo is going to remain on your reports for up to seven years even if you redeem the vehicle.
In order to get a redeemed repossession off your credit reports, you have to wait for that time to pass. The only other way to remove it from your records is to find an error related to the repo on your reports and dispute it with the credit bureau with the inaccurate listing. This can be anything from a wrong date to an incorrect fee relating to the incident.
You can dispute the error electronically or via mail. To do this, submit a detailed letter stating why the information is wrong and requesting removal of the entry, along with paperwork evidence that backs up your claim.
Once your dispute reaches the credit bureau, they have 30 days to investigate and come up with a decision. If you don’t receive a letter from the credit bureau with a plan of action within those 30 days, the listing is automatically removed.
Getting a Car Loan after a Repossession
Just because you have a repossession listed on your credit reports doesn’t mean you can’t get approved for auto financing. Yes, your credit score could drop (typically anywhere from 60 to 240 points), but you can improve your chances of getting approved for a car loan after repo with these three things:
- Wait it out – The best thing you can do is wait it out, and allow your credit score to improve. In fact, lenders like to see that at least a year has passed before considering an applicant with a repossession.
- Reduce risk – Having bad credit and a repo on your credit reports puts you in the "high risk" lending category. To reduce the risk, be as prepared as possible. This includes having a sizeable down payment, picking an affordable vehicle, and having a cosigner just in case.
- Pay the deficiency balance – If you redeemed your car, this doesn’t apply since the loan is paid. However, if you reinstated the loan, and there’s a deficiency balance, make sure you pay it before trying to get financed again.
The Bottom Line
Redeeming your vehicle doesn’t give you extra points on your credit score for paying it off – the repossession is still listed on your credit reports, and, unless it’s listed inaccurately, you have to wait seven years before it drops off. Luckily, you can still get the financing you need even with a repo listed on your credit reports – you just need to work with the right special finance dealership.
At Auto Credit Express, we work with an extensive network of special finance dealers that have lenders available to work with people who’ve experienced repossession or are dealing with another unique credit situation. Begin your auto financing journey with us today. Simply fill out our free and easy car loan request form to get started.