How Long Does a Repo Stay on Your Credit Report?

A vehicle repossession occurs when a lender reclaims property, such as a car, due to a borrower’s failure to make agreed-upon loan payments. This action signifies a breach of the loan agreement, where the vehicle serves as collateral. It represents a significant financial setback that can have lasting consequences for an individual’s credit standing and future borrowing capabilities.

Duration on Credit Reports

A repossession remains on a consumer’s credit report for up to seven years. This timeframe is established by the Fair Credit Reporting Act (FCRA), a federal law that governs how consumer credit information is collected and used. The seven-year countdown typically begins from the date of the original delinquency, the first missed payment that led to the repossession, not the date of the repossession itself. Once this seven-year period concludes, the repossession entry should automatically be removed from the credit report by the credit bureaus.

Impact on Credit Scores

A repossession is a severe negative mark that can significantly lower credit scores. It signals a heightened credit risk to potential lenders. The precise numerical impact on a credit score can vary based on an individual’s overall credit history, with higher scores often experiencing a more substantial drop. The negative effect on credit scores is most pronounced in the initial years following the repossession. Over time, its influence tends to diminish as newer, positive financial behaviors begin to outweigh older derogatory information.

Information Reported About Repossessions

Credit reports typically include specific details related to a repossession. These include the account status, often listed as “repossessed” or “charged off,” indicating the lender has written off the debt. The original loan amount and the date of the repossession are also reported. Credit reports may show any remaining balance, known as a deficiency balance, if the sale of the repossessed property did not cover the full amount owed. This balance, along with the creditor’s name, provides transparency regarding the outstanding debt.

Accessing Your Credit Report

Consumers are legally entitled to obtain a free copy of their credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. This access is granted once every 12 months, enabling individuals to review their financial information. The official website for requesting these free reports is AnnualCreditReport.com. Requesting reports online often provides immediate access to the information after identity verification. Regularly checking these reports allows individuals to monitor their credit health and identify any potential inaccuracies.

Disputing Credit Report Inaccuracies

If an individual identifies inaccurate or incomplete information on their credit report, they have the right to dispute it. The process typically involves contacting the credit bureau directly that is reporting the error. It is advisable to provide supporting documentation that substantiates the claim of inaccuracy. Upon receiving a dispute, the credit bureau is generally required to investigate the claim, typically within 30 days. If the investigation confirms the information is inaccurate or cannot be verified, the bureau must correct or remove the entry from the credit report.