When Does a Repossession Fall Off Your Credit Report?

Repossession is a process where a lender takes back property, such as a vehicle, that was used as collateral for a loan when the borrower fails to make payments as agreed. This action serves as a severe negative event on a consumer’s credit history. Once a repossession occurs, it is reported to credit bureaus and becomes a part of the individual’s credit report.

Repossessions and Your Credit Report

A repossession is recorded on a credit report with specific details that highlight the default. This entry typically includes the original creditor’s name, the account number, the date of delinquency that led to the repossession, the actual date of repossession, and any remaining balance owed, often categorized as a charge-off.

A repossession on a credit report is viewed as an indicator of high credit risk by credit scoring models like FICO and VantageScore. Before the repossession, missed payments already begin to harm credit scores, as payment history is a primary factor in these models. The addition of the repossession itself further intensifies this negative impact. The immediate effect can result in a notable decrease in a credit score, potentially ranging from 50 to 150 points or more, depending on the individual’s credit profile before the event.

The Seven-Year Reporting Limit

A repossession generally remains on a consumer’s credit report for seven years. This standard reporting limit is governed by the Fair Credit Reporting Act (FCRA). The FCRA mandates how long certain negative information can remain on a credit report to ensure fairness and accuracy in consumer reporting.

The seven-year period typically begins from the date of the original delinquency that led to the repossession, rather than the date the asset was actually repossessed. For instance, if a borrower first missed a payment in January, and the asset was repossessed in March of the same year, the seven-year reporting period would commence from that initial January missed payment. Once this seven-year period from the original delinquency date has passed, credit bureaus are legally required to remove the repossession entry from the credit report.

Managing Your Credit Report After the Period Ends

As the seven-year mark approaches, consumers should monitor their credit reports from all three major credit bureaus: Experian, Equifax, and TransUnion. This monitoring helps confirm that the repossession entry is removed as expected. Consumers are entitled to free copies of their credit reports from each bureau annually through AnnualCreditReport.com, and in some cases, weekly access is available.

If a repossession entry does not automatically fall off after seven years, consumers have the right to dispute the outdated information. The dispute process involves contacting the credit bureau directly, providing details about the inaccurate entry, and submitting any supporting evidence. The credit bureau is then required to investigate the dispute, usually within 30 days, and remove the entry if it is found to be inaccurate or outdated. Removal of a repossession benefits a credit score, as a major negative mark no longer impacts creditworthiness.