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Sometimes bad things happen to good people. We miss payments, we fall behind, and do the best we can to keep things afloat. Repossession can show up on credit reports and impact credit, but it won’t stick around forever.
Repossession occurs when a debtor defaults on a loan and the creditor takes back the financed collateral. Repossession might happen when a borrower fails to make payments on personal property—like a car—that’s purchased with credit.
There are two kinds of repossession:
The lender may either keep the repossessed item or sell it to recover at least some of the loan balance. The borrower might still owe money after the repossession if the lender doesn’t recover enough.
How soon repossession happens after a missed payment could depend on the lender, the product that’s financed and the state in which you live. For example, the Federal Trade Commission (FTC) says there are several states where a lender can repossess a car as soon as the borrower defaults on their loan. But the FTC also says that lenders may offer borrowers ways to bring the account current and avoid repossession.
You might be able to stop a repossession and keep your property if you contact your lender as early as possible. Your lender may be able to work with you on a repayment plan, change your payment schedule or revise part of your contract. It is important to talk to your lender as they are most likely willing to work things out.
If your car is repossessed, your lender could report this information to the credit bureaus, and it could show up as a “derogatory mark” on your credit reports. These negative marks can be caused by:
Credit-scoring companies use the information from your credit reports to calculate credit score. So, credit scores could drop from the repossession itself and from related events that impact payment history. That’s because payment history is an important factor in calculating your credit scores from both FICO® and Vantage Score®.
But it’s hard to determine the exact impact a repossession can have on credit scores. That’s because it can depend on several factors, including which credit bureau provided the information and which credit-scoring model was used in the calculation.
And keep in mind that lenders might take legal action too. Although court judgments no longer appear on credit reports or factor into credit scores, they’re still part of the public record. If a lender looks up your public records, this could make it harder to qualify for future loans.
A repossession can stay on credit reports for up to seven years. According to Experian®, the seven-year countdown starts on the date of the first missed payment that triggered the repossession. But Experian says that once that time ends, they’ll automatically remove the account from your credit report.
Improving your credit after a repossession won’t happen overnight. But there are steps you can take right away to start rebuilding your credit.
Repossession of a car or other personal property can impact credit for several years. But it won’t last forever. A repossession typically stays on credit reports for seven years. However, you can take steps to improve your credit before the seven-year period ends.
Short answer, YES! Credit Cars specializes in offering quality vehicles to those who challenged credit history. Credit Cars is Orlando, Florida’s best buy here pay here dealership operating since 1963. If you need a car but have bad credit, visit our lot today.
