How Will a Voluntary Surrender Impact My Credit Score?

How Will a Voluntary Surrender Impact My Credit Score?

A voluntary surrender is considered a negative mark on your credit profile because it indicates that you've failed to meet your obligation to repay your auto loan. As a result, it can lower your credit score.

Additionally, if the lender doesn't recoup what you owe when reselling the vehicle and you don't pay the remaining balance, it could be turned over to a collection agency. This may result in a collection account being added to your credit history. If that happens, both the original account and the collection account may remain on your credit report for up to seven years from the original delinquency date, or the date the account first became past due and was never brought current.

Voluntarily returning the vehicle, however, shows that you took responsibility and worked with the lender rather than forcing it to pursue a repossession. For this reason, lenders may consider a voluntary surrender to be slightly less negative than a repossession.

How Long Does a Voluntary Surrender Appear on My Credit Report?

A voluntary surrender will typically remain on your credit report for seven years from the original delinquency date.

Example: Let's say you miss your first car loan payment in September 2025. In December, your lender notifies you of its plans to repossess the vehicle if you don't catch up on payments. You then decide to voluntarily surrender the vehicle in January 2026.

While the derogatory mark will be added to the account in January—the month your loan went into default and you opted for voluntary surrender—the loan and its negative information will be removed from your credit reports in September 2032—seven years after your first missed payment that led to default.

How to Rebuild Your Credit Score After a Voluntary Surrender

If you've had a voluntary surrender and want to begin rehabilitating your credit, here are some steps you can take:

• Review your credit reports. Start by getting free access to your Experian credit report and FICO^® Score^Θ to get an idea of where you stand and which areas you need to address. For a fuller picture, you can also obtain free weekly credit reports from all three credit bureaus at AnnualCreditReport.com.
• Bring any past-due accounts current. If you are past due on any other credit accounts, you should bring those accounts current as soon as possible—that includes collection accounts. Payment history is the most important factor in credit scores, so making all payments on time going forward is key.
• Pay off any outstanding debt. If you still owe money on your vehicle loan after the vehicle has been sold, contact the lender and make a plan to repay that amount as soon as possible.
• Reduce balances on your credit cards. Your credit utilization rate is a key factor in credit scores, so paying down any high credit card balances and keeping them as low as possible will benefit your scores.
• Add your utility and streaming service payments to your report. You can sign up to add your on-time rent, utility, phone, streaming service and other eligible payments to your credit history with Experian Boost^®ø, which can help you improve your scores based on Experian data right away.

The Bottom Line

Voluntarily surrendering your car may not be ideal, but it can sometimes be the lesser of two credit evils if you're facing repossession. While it will still negatively impact your credit, taking responsibility and working with your lender may help minimize the long-term damage.

If you've gone through a voluntary surrender, focus on rebuilding your credit by catching up on past-due accounts, reducing debt and making all payments on time. Also, don't forget to monitor your credit regularly. Tracking your credit report and score can help you stay on top of your progress and take steps to improve your financial health.