How Long Does a Car Repossession Stay on a Credit Report?

A car repossession occurs when a lender seizes a vehicle due to missed loan payments. This event impacts personal finance and credit standing, reflecting an inability to meet financial obligations and leading to adverse entries on credit reports. A repossession signals heightened risk to future lenders, potentially affecting access to new credit or terms. Understanding how this event is recorded and its duration on your credit history is important for managing financial recovery.

Understanding Repossession on Your Credit Report

When a vehicle is repossessed, the lender reports this event to the major credit bureaus, which include Equifax, Experian, and TransUnion. These bureaus compile financial data into credit reports, used by lenders to assess creditworthiness.

A repossession entry includes the account status, indicating that the loan was defaulted upon and the collateral seized. It also details the original loan amount, the date of the repossession, and any remaining balance after the vehicle is sold. This remaining balance is known as a deficiency balance, which arises when the proceeds from the sale of the repossessed vehicle do not cover the full outstanding loan amount, including associated fees like towing, storage, and administrative costs. The lender may pursue collection of this deficiency balance, which can also appear as a separate entry on a credit report.

How Long a Repossession Stays on Your Credit Report

A car repossession remains on your credit report for seven years. This seven-year period starts from the date of the first missed payment that led to the repossession, not the actual repossession date. This duration is mandated by the Fair Credit Reporting Act (FCRA).

Even if you negotiate with the lender or pay off the deficiency balance, the repossession will remain on your credit report for the full seven-year term. The repossession can significantly lower your credit score, potentially by 100 points or more. While the repossession entry may be removed after seven years, any deficiency balance sold to a collection agency might have its own separate reporting period. This collection account can also stay on your report for seven years from the date the original account first became delinquent.

Addressing Errors on Your Credit Report

If you discover a repossession entry on your credit report that is inaccurate or incomplete, you have the right to dispute it. Obtain a free copy of your credit report from Equifax, Experian, and TransUnion. Review all details, including account numbers, balances, dates, and payment terms, to identify discrepancies.

To initiate a dispute, contact the credit bureau directly that is reporting the incorrect information. You can do this online, by phone, or by mail. Your dispute should be in writing, clearly explaining what information is wrong and why, along with a request for its removal or correction. Include copies of documents that support your claim, such as payment records or correspondence from the lender, while keeping your original documents for your records. The credit bureau is required to investigate your dispute within 30 days and will forward the information to the furnisher. If the investigation confirms the information is inaccurate or cannot be verified, it must be corrected or removed from your report.