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Repossession

How Long Does It Take for a Repossession to Come off Your Credit?

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Dear Experian,

When determining when a car repossession will be removed from your credit report, how is the original delinquency date of the original auto loan determined? Is it based on the date of the first missed payment originally reported? Or is it based upon the date of the actual repossession?

- CPK

Dear CPK,

A repossession takes seven years to come off your credit report. That seven-year countdown starts from the date of the first missed payment that led to the repossession.

When you finance a vehicle, the lender owns it until it is completely paid off. The vehicle is the collateral that secures the debt.

A vehicle repossession happens when you stop making payments on your auto loan and the lender comes to physically take back the vehicle. In most cases, the lender has made several attempts to communicate with the borrower and collect payment to no avail.

A Repossession Stays on Your Credit Report for 7 Years

If you are late to pay an account and then bring it current, the late payment will be removed after seven years, but that doesn't mean the entire account will be removed with it. In that instance, only the delinquencies up to the point the account became current, which have reached the seven-year mark, will be removed. The rest of the account history will remain on the report.

If there are no other delinquencies in the history, the account status will become positive. Positive accounts remain on your credit report for 10 years from the date they are closed, or indefinitely if they are open.

In the case of a repossession, the account was never brought current, so the entire account will be removed seven years from the original delinquency date. The original delinquency date is the date of the first missed payment that led up to the repossession status.

There are other dates in the credit report, as well. Some you might see are the open date of the account, the date the account was closed, the date of the last payment or activity on the account, or the date the account was last updated by the lender. None of these dates have any bearing on when negative information will be removed from the credit report.

Whenever possible, Experian provides the date the account will be removed as part of the account information on a credit report. You may see a notation next to your account that reads "this account is scheduled to continue on record until MM-CCYY." The date listed there is the date the account will be removed from your credit report.

Once the seven-year period is reached, Experian will delete the account from your credit report automatically. You don't need to request that it be removed.

How Does a Repossession Affect Your Credit Score?

Payment history is the most important factor in your credit scores. Lenders determine the likelihood that you will make future payments on time by looking at how you have managed your credit accounts in the past.

If your vehicle is repossessed, it means you stopped making payments toward the debt and the lender took the vehicle to recoup the debt it was owed. In most cases, repossession is a last-resort option.

A repossession is considered derogatory, which means it will have a substantially negative impact on your credit scores. It may be difficult to qualify for new credit or services with a repossession in your credit history. If you do qualify, you will likely be asked to pay higher interest rates and fees to compensate for the added risk the lender is taking by extending credit.

How to Rebuild Your Credit After a Repossession

Rebuilding your credit scores after a repossession may take time, but you can start right away. Here are some tips to begin improving your credit:

  • Bring other past-due accounts current. If you are behind on any other accounts, catching up on payments until your account has no past-due amounts is a good first step toward rehabilitating your credit scores.
  • Pay off any outstanding debts, such as collections or charge-offs. If you have other outstanding debts in your credit history, paying them off can help improve your scores. This includes any balance that may be left on your repossessed account after the lender has sold the vehicle to recoup the balance on your loan. An account with past-due payment history will still be considered negative, but potential lenders may be more willing to extend credit in the future if they see that you've since made good on the debt.
  • Make payments on time going forward. If you have other credit accounts, be sure all payments on those accounts are made on time, every time. Your recent payment history matters the most. The longer ago your delinquencies were, the less impact they will have, and your more recent positive payment history will be reflected in your scores.
  • Sign up for Experian Boost . Experian Boost allows you to get credit for your on-time utility, cellphone and Netflix® payments. You can add these payments going back as far as 24 months.
  • Order your Experian credit score. You can get your free credit score from Experian anytime. When you receive your score, you will get a list of the risk factors that are most affecting you. Paying attention to these factors can help you determine what other changes you can make to improve your credit.

Thanks for asking,
Jennifer White, Consumer Education Specialist

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