Getting a vehicle on a loan can be a risky thing especially if you fail to make the payments on time.
This would result in a repossession and it can take a long while remove repossession credit report!
First step towards fixing an issue is understanding what it is and how can it be resolved easily.
In this article, we will discuss about what a repossession on a credit report is, how it can be removed, and how it affects your credit score.
What Is Repossession Report and Why Is It So Bad For Your Credit?
In majority of the cases, repossession is carried in two ways.
- Voluntary Repossession
This is when you admit that you can not make the payments and surrender the vehicle yourself. The lender will take it back although you can retain some control if you continue to make the payments later on.
- Repossession Through Bank
If you have got a vehicle on loan and can not pay the monthly bills, the bank can intervene.
This happens when you do not send back the vehicle yourself so a higher authority has to step in to reclaim the vehicle. Keep in mind and this can take place without the bank notifying you in advance.
Why Is Repossession On The Report So Worrisome?
If you consider all the things that make it difficult to improve credit score, repossession will top them.
This is because failure to make payments on time and incurring high interest can leave a long-lasting affect on your FICO score.
A case of repossession is normally initiated if you miss out on at least 3 payments and do not get in touch with the lender to explain the situation.
Along with the report of repossession, your credit history will also include monthly missed payments and that would be a big blow for your credibility.
Did You Know? A repossession on your credit report can make your score fall by as much as 100 points immediately.
The situation can get even worse if the lender was working with a collection agency. In this case, the debt will be mentioned on your report twice and that could further lower your credit score.
Can It Be REALLY Removed From the Credit Report?
Well, that’s the good news!
It is possible to remove repossession from your report by a number of methods. The first way to do this is by disputing the report yourself or hiring a professional credit repair company to take care of it.
Obviously, professional companies can charge a lot for this service.
However, sometimes the cost of paying a professional is much less than the degree that your finances will suffer if you don’t make a credit repair company intervene.
How To Remove Repossession Credit Report
There are a number of things you can do to remove repossession from credit report. Luckily, most of these methods would not require you to spend extra money but if you decide to involve professionals, you should be ready to invest some bucks.
Negotiate With The Lender
The most peaceful way to resolve this issue is to get in touch with lender and negotiate some relaxation in auto loan terms.
It does not matter whether you were working with online lender like Capital One or a finance company, you can always contact their customer support team for discussions on such topic.
If the negotiations are taking place after the repossession, it means that the vehicle has already been taken back.
However, negative remarks still remain on your report and you can request the lender to take them off in exchange of paying off balance.
Sometimes it can be difficult to get in touch with the right person in this case.
You might need to convince finance companies or reliable online banks to put you through to their manager or someone who has the authority to negotiate.
Moreover, make sure you can make the payments that you promise as part of this contract!
Dispute To Remove Repossession Credit Report
It is common for users to dispute a credit report in order to get an incorrect item removed.
You can open the dispute with credit bureaus but you have to ensure that you are, in fact, pointing to wrong information. Otherwise, there is no use!
Credit bureaus are responsible for gathering your financial information and devising FICO score which is then used by lenders or credit card issuers.
If you think that the repossession on your report is an inaccuracy, you can bring up the case with credit bureaus and have it removed.
Pro-Tip! Look into dates, payment terms, balances, and account number when trying to details that can help you dispute an item.
It takes credit bureaus up to 30 days to look into a dispute and verify its authenticity. If it turns out that your claim was correct, the data will either be updated or completely removed from the record. Consequently, your FICO score may improve as well.
However, if the authorities decide that there is nothing wrong with the information quoted on your report, it will remain there as it is.
You can send dispute letters to credit bureaus. These must include your full name, contact address, contact number, and social security number.
Following are the mailing addresses for the three major credit bureaus.
- TransUnion Consumer Solutions P.O. Box 2000 Chester, PA 19016-2000.
- Experian Dispute Department P.O. Box 4500 Allen, TX 75013
- Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30374-0256
Leave Things To Professionals
The last resort is to contact professional companies that perform the task of credit repair and credit report dispute. Although such companies will do what you could have done yourself too but they are most helpful when you don’t have to file dispute letters.
Attention! Professional credit repair companies also have expertise that can be more helpful than common knowledge. The only downside is that such firms can charge a lot for their services.
Good credit repair companies such as Lexington charge a monthly fee but will most definitely get the job done.
How To Keep Your Credit Report Away From Repossession?
In the start of the article, we promised to let you know of one secret way in which you can avoid repossession and thus, steer clear of all the trouble of having it removed.
What’s the secret ingredient?
Here’s the tip! When you are getting an auto loan, make sure the two parties decide over monthly payment that is reasonably affordable. This will help you make payments for your vehicle on time and therefore avoid repossession in future.
Pro-Tip! Keep a check on how comfortably you are making monthly payments. If you feel like you have started to lag behind, get in touch with a lender and try to reconstruct the loan terms before you miss out on any payment.
Other Things You Need To Know…
So far we have talked about everything that is important in terms of what repossession on credit report is, how it can be removed and how it can be avoided in future.
In addition to this, we would also like our readers to be well-equipped with some extra knowledge. Therefore, we have summed up some important details related to remove repossession credit report.
This can prove to be quite helpful so stay tuned!
Where To Find The Repossession On Your Credit Report?
Imagine having a repossession pull down your score and you are not even aware that it is there. Nightmare!
This shows why it is extremely important to know where to spot the repossession on the report. Such negative items are usually listed in section of public records.
Now where these records are mentioned may vary from one credit bureau to another. For example, in case of Experian, public records are given right at the top of the credit report.
You should check out how to read and understand credit report in order to learn a thing or two about identifying the different information given here.
Is Removal Of Repossession Credit Report Easy?
As we talked about before, repossessions can be of two types and neither of them are easy to remove.
Voluntary or involuntary repossession, once it is on your records, can stay for there for a quite a long period of time in form of missed payments.
Nonetheless, involuntary repossessions are more worrisome. They indicate that you defaulted on a loan and the finance company had to make the court intervene in order to get their rights.
Attention! You can not file a “breach of privacy” case when the lender sends in some one to repossess the vehicle. Typically, the team will bring documents and signed contracts as a proof against you.
Some times it also happens that payment dates are changed when the contract is on-going.
In this case, you have to get the alteration in writing to prove that you were paying on the correct date. Otherwise, a word of mouth will not be considered a valid proof in the court.
How Long Does A Repossession Impact On Your Credit?
This is something that we get a lot of queries about. Users are not aware how a repossession can make their credit score take a dig. In fact, such a negative item can bring your score down by 100 points immediately.
Note! You have to keep in mind that the affect on your score would be a culmination of all the payments that you missed. This can make things even worse!
Most of you who are aware how calculation of credit score works would already know that timely payments are a key factor when you wish to maintain a good score. Conversely, missed payments can bring it down pretty quick.
The bottom line is that it is not possible to determine how much your credit score will suffer but it will never be a pretty sight!
Attention! A repossession can stay on your report for 7 years if you decide to do nothing about it.
Obviously, this means that your credit score will also be affected the entire time. That is why we suggest that you quickly take whatever actions possible to resolve the issues timely.
What Is Voluntary Repossession Credit Report?
It is always better to take responsibility for the missed payments. Although voluntary repossession would have the same impact on your credit score, it can make it easier to reach negotiation with you lender.
Loan company will view you as a customer who reserved dignity and shared his financial situation instead of running away.
This might make it possible to change the contract a bit and give you some flexibility in making payments later.
Note! Voluntary repossession also means that the bank or court would not have to interfere in order to take hold of the vehicle.
By giving up the vehicle on time, contacting the lender for negotiation and accepting your mistake, you might save yourself from a couple of missed payments. Therefore, voluntary repossession is the right way to go if you know that there is no way to avoid it.
Can You Apply For a Loan After Repossession?
Will you get a chance to loan a vehicle with a repossession on your report? Yes! Would that be easy? No! Would that come on difficult terms? YES!
When applying for credit cards, it often difficult to qualify for good cards if you have a poor credit score.
That is why many banks will suggest that you should go for secured cards. These make you submit an initial deposit as security against your weak credit history.
The same goes for auto loan and repossession. Even if a lender decides to take a chance with you, he will probably do so at a high interest rate.
Repossession and Co-signers
Co-signers are equally responsible for auto loan payments. This means if a repossession takes place, they will also be held accountable for pending amount and may have to appear in the court along with you.
In a Nutshell – It Is Possible, It Is NOT Easy!
So the bottom line is that a repossession can be taken off the credit report. However, it is not an easy job. Unless you can pay off the debt, there is not much you can do to remove this negative item from your records.
There is always a chance that credit bureaus mention something inaccurate on your report. Therefore, prior to getting worried, make sure that the information is right. Then use one of the three methods we have mentioned above to resolve the issue peacefully.