How to Get a Repossession Off Your Credit Record

Understanding Repossession on Your Credit Record

A repossession occurs when a lender takes back an asset, such as a vehicle, that was used as collateral for a loan, typically because the borrower failed to make payments as agreed. This event is reported to major credit bureaus and significantly impacts an individual’s financial standing. The entry on a credit report serves as a record of the defaulted loan and the lender’s action to recover the collateral.

When a repossession appears on a credit report, it includes specific details about the account. This information often encompasses the original creditor’s name, the date the account was opened, the date of the last payment, and the date the repossession occurred. It may also show the original loan amount, current balance owed, a status indicating “repossession” or “charge-off,” and a “deficiency balance,” which is the remaining amount owed after the sale of the repossessed asset.

A repossession severely impacts an individual’s credit score. Payment history is a significant factor in credit scoring models, and a repossession indicates a substantial failure to meet financial obligations. Credit scores can drop by 50 to over 100 points, depending on the individual’s credit profile. This lowered score can make it more challenging to obtain new credit, secure favorable interest rates, or even rent an apartment.

A repossession remains on a credit report for seven years from the date of the original delinquency that led to the repossession. This period starts from the date the account first became delinquent and was never brought current, not necessarily from the date of the repossession itself. While the entry persists, proactive steps can be taken to dispute inaccuracies or negotiate with creditors to mitigate its negative effects.

Disputing Inaccuracies on Your Credit Report

Addressing a repossession entry on your credit report begins with scrutinizing it for inaccuracies. Obtain copies of your credit reports from all three major credit bureaus: Experian, Equifax, and TransUnion. AnnualCreditReport.com is the official source for free annual credit reports, allowing access to one free report from each bureau every 12 months. Reviewing all three reports is important because information may vary.

Upon receiving your credit reports, examine the repossession entry for errors. Look for incorrect dates, such as the date of delinquency, repossession date, or account opening date. Verify the account number, original creditor’s name, and reported balance. Inaccuracies could also include a misreported account status or an account that does not belong to you.

Errors with repossession reporting include accounts reported multiple times, incorrect payment status (e.g., reported as a charge-off when repossessed and sold), or an inaccurate deficiency balance. Sometimes, the account may be reported as still active when it should reflect a closed status after repossession and sale.

If an inaccuracy is found, file a dispute with the credit bureau reporting the incorrect information. This can be done online, by mail, or by phone. When submitting a dispute, clearly identify the inaccurate information and provide supporting documentation, such as payment records, loan agreements, or correspondence with the creditor. Include copies of personal identification, like a driver’s license and a utility bill, to verify your identity.

Once a dispute is filed, the credit bureau must investigate the claim within 30 to 45 days. They will contact the data furnisher to verify the information. After the investigation, the credit bureau will inform you of the outcome. This could result in the correction or deletion of the inaccurate entry if the information cannot be verified. If the information is verified as accurate, the entry will remain on your report.

Negotiating for Removal with Creditors

Direct negotiation with the original creditor or collection agency is another approach to address a repossession on your credit report. Two common strategies are the “pay for delete” (PFD) and “goodwill deletion” requests. A PFD offer involves paying a portion or the entirety of a deficiency balance in exchange for the creditor agreeing to remove the repossession entry. A goodwill deletion is a request for the creditor to remove the entry as a gesture of goodwill, often after the debt has been fully paid or if extenuating circumstances led to the repossession.

Before contacting the creditor, gather all relevant account details. This includes the original loan agreement, the account number, and any payment records. Know the current deficiency balance, if one exists, and understand your financial capacity for a PFD offer.

When drafting communication for a PFD or goodwill request, clearly state your account number and the specific entry you wish to remove. For a goodwill request, explain the circumstances that led to the repossession, focusing on temporary hardships, and express your commitment to financial responsibility. If proposing a PFD, clearly state your offer amount and explicitly link the payment to the removal of the credit report entry.

Contact the original creditor or collection agency. Written communication via mail or email is preferred to create a clear record. Address your communication to the relevant department, such as credit reporting or collections. Maintain a polite and professional tone during negotiation. Be prepared for the creditor to initially decline your request; persistence with a reasonable offer or compelling circumstances can yield positive results.

If an agreement is reached, ensure the creditor provides written confirmation of their commitment to remove the repossession entry before you make any payment or fulfill agreed-upon terms. This written agreement should detail what will be removed and by when. After the agreement is secured and you have fulfilled your part, monitor your credit reports over the next 30 to 60 days to ensure the entry is removed or updated as agreed.