Repo Removed: How Much Will My Credit Score Go Up?

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A repossession listed on your credit report can cause significant damage to your credit score, which is based on factors such as your debt to credit ratio, the number of accounts you have, and your payment history. Therefore, in addition to the repossession itself, any related late payments, collection accounts, and court judgments will also be included in the report. Each negative mark reduces your score, so the combined effect will cause a reduction of up to 100-150 points.

The good news is that the impact on your credit score lessens over time, especially if you keep up with payments on other accounts – though it will take about seven years for the repossession to disappear completely. Once the account is removed from your report, the lost points are restored. Unfortunately, as long as the repossession and related negative marks are on your record, your borrowing power is weakened. 

Why Property Gets Repossessed

Any item you finance is subject to repossession if you fall behind on your payments. If the lending company determines that you are unable or unwilling to repay the loan, the lenders are legally entitled to repossess the financed property per federal and state laws. According to Florida statute 537.012, the lenders may repossess the financed property once your account becomes delinquent, which technically occurs when your payments are 30 days overdue. However, many companies will continue attempting to collect payment for a few months before repossessing your property. 

How a Repossession Account Can be Removed from Your Credit Report Early

If your property has been repossessed or is in danger of repossession, contact the lending agency to discuss the possibility of a settlement. Sometimes lending companies will agree to settle your debt for less than the amount owed. Be advised that you may still owe taxes on the unpaid amount of the settlement and that the settlement will still show up on your credit report as a negative mark. However, the damage to your credit score is generally more minor for a settled account than one written off as unpaid. 

If the account showing your repossession is inaccurate, or if you believe that your property was repossessed unlawfully, you can file a dispute with the lending company that repossessed your property and the credit bureaus to which the company reported the repossession. There is no fee for filing a dispute, and the agencies are required to remove the account if their investigations confirm that the repossession was illegal or unfair, or that information contained in the account was inaccurate. Once the account is removed, it may take a month or two for the change to affect your credit score. 

Ways to Improve Your Credit Score Despite a Repossession

You can work on repairing your credit despite a repossession by paying your other bills on time to avoid further negative marks and working with a reputable credit repair service that can communicate with your debtors on your behalf and work with you to ensure that the information on your credit report is accurate. You also want to monitor your credit report for any fluctuations in your score. This can alert you to any unusual, fraudulent, or incorrect information, which should be dealt with immediately to avoid long-term damage to your credit score. Check with your credit card company or bank to see if they offer free access to your score. You are also allowed to request one free copy of your credit report from each of the three major reporting companies (Equifax, Experian, and Transunion) per year. 

Having property repossessed seriously damages your credit score. Financing or borrowing money becomes more difficult since lending agents will either deny you a loan or charge a higher interest rate if they agree to lend you money. If you can successfully dispute the repossession, then the account will be removed from your report, and your lost points will be restored after a month or two, provided there are no other negative marks in your credit history.

If your property was repossessed legally, and all the information on your account is correct, then it will take about seven years for it to fall off of your credit history. This makes financing purchases much more difficult, but you can still work to improve your credit during that time. Make your payments on time and monitor your credit score throughout the year. Avoid applying for more loans unless necessary. You can ask someone to cosign your loan, but know that defaulting will damage their credit (and likely your relationship). Your score can climb significantly once the repossession has been removed from your report. Regaining those points will take some time, but your credit can recover from a repossession with patience and discipline.  

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