How Long Does a Repossession Stay on Your Credit Report?

A repossession occurs when a lender reclaims property, such as a vehicle, because a borrower has failed to make agreed-upon payments. This action signifies a serious default on a loan obligation, directly impacting an individual’s financial standing. The presence of a repossession on a credit report signals a history of unfulfilled financial commitments to potential creditors, making it important for consumers to understand its impact.

How Long a Repossession Stays on Your Credit Report

A repossession remains on a consumer’s credit report for seven years from the original delinquency date of the account. This timeframe applies consistently across all three major credit bureaus: Equifax, Experian, and TransUnion. The Fair Credit Reporting Act (FCRA) establishes the duration for which such negative information can be reported.

Even if the underlying debt associated with the repossession is subsequently paid off, the repossession itself remains on the credit report for the full seven-year period. For example, if a car loan became delinquent in January 2020 and was repossessed, the record would remain until January 2027. This duration is fixed regardless of future payment activity on the debt.

Impact on Your Credit Score

A repossession is considered a derogatory mark on a credit report, indicating a failure to meet loan obligations. Its appearance can cause a significant and immediate drop in credit scores, potentially by 100 points or more depending on the individual’s credit history. This reduction reflects the increased risk a borrower poses to lenders.

The negative impact on a credit score is most severe immediately after the repossession is reported. While the effect lessens over time as the repossession ages on the report, it continues to influence the score until it falls off after the seven-year period. This persistent effect can make it more challenging to obtain new credit, such as personal loans, credit cards, or even housing.

When new credit is extended after a repossession, it often comes with less favorable terms, including higher interest rates and less desirable loan conditions. For instance, a loan that might have had a 6% interest rate before a repossession could jump to 15% or more afterwards. This increases the total cost of borrowing significantly. The lasting presence of a repossession on a credit report can impede financial progress for years.

Information Reported and Accuracy

A credit report entry for a repossession includes specific details about the account. This information lists the original creditor, the account number, the date of last activity, and the amount owed at the time of repossession. The account status will be marked as “repossessed” or a similar designation.

Consumers should regularly check their credit reports from all three major bureaus for accuracy, especially concerning derogatory marks like repossessions. Consumers are entitled to a free copy of their credit report from each bureau once every 12 months, allowing for diligent review of all reported information.

If any information related to the repossession is found to be inaccurate or incomplete, consumers have the right to dispute it. The Fair Credit Reporting Act provides a process for disputing errors with both the credit bureaus and the creditor that furnished the information. The credit bureau must investigate the dispute within 30 days and correct any verified inaccuracies.