Things happen, and if you couldn’t prevent a repossession from happening and you lost your car, you can still get financed for another vehicle in many cases. If you're looking to repair your credit after repossession, there are several different strategies you can use to boost your credit score and put yourself in position to get approved to finance another car in the future.
How a Repossession Affects Your Credit
What exactly does a repossession do to your credit? Well, a repo definitely drops your credit score, but by how much depends on where your credit stood before the repossession occurred. Generally speaking, though, a repo could cause a drop of 100 points, or as little as 20 to 30 points – there’s no way to know until it actually happens.
A repossession stays on your credit reports for up to seven years; unless the repo was listed inaccurately, there’s no way to remove it before then. However, if seven years have passed and it hasn’t been removed, you should dispute the error immediately.
Fixing Your Credit after a Repo
So, you had your vehicle repossessed and your credit score took a hit. What do you do to help bring your score back to where it was? You have a few different ways to do this, but we recommend these four do-it-yourself credit repair tips:
- Dispute errors – You should know where your credit stands, and what’s listed on your credit reports. If you find any information that’s wrong, you can dispute it. The credit bureau is required to investigate your dispute, and must come up with a decision within 30 days. If they don’t, the incorrect mark is automatically removed.
- Pay all bills on time – Your payment history is the biggest factor in your FICO credit score, the most common scoring model used by lenders, making up 35% of it. It’s important that you prioritize paying all of your monthly bills on time. Your credit score should improve greatly over time if you do this.
- Pay down credit card balances – Amounts owed is the second biggest factor in your FICO score at 30%. A large factor in this category is the amount of your credit card balances compared to your credit card limits, called the credit utilization ratio. Ideally, you should try to pay off your credit cards each month. However, it’s okay to keep a balance. Just make sure the amounts owed across all credit cards doesn’t exceed 30% of your available credit.
- Apply for new credit – Adding new lines of credit can be a great way to rebuild it. The key is to make sure you can financially handle additional credit – if you can’t keep up with the additional monthly payment(s), you could end up lowering your credit even more.
If you want to make the credit repair process easier on yourself, you can use our credit repair company partnership.
Looking to Use a Car Loan to Improve Your Credit?
Are you considering an auto loan to help improve your credit, but worry a repo listed on your credit reports is in the way? Have no fear, we have a solution.
At Auto Credit Express, we work with a large network of special finance dealers that have the lending resources to help people in many types of credit situations, including repossession.
Our network is nationwide, so we can help you find a dealership in or near your local area. Don't wait any longer to get the new vehicle you need! Simply fill out our car loan request form, and we'll get to work matching you with a dealer.