A repossession on your credit report can be a significant obstacle in your financial journey. Whether it’s from a car, furniture, or other items, the impact of a repossession on your credit score can make it harder to secure loans, credit cards, or even housing. Thankfully, there are steps you can take to remove or minimize the damage from a repossession on your credit report. In this guide, we’ll provide actionable strategies for getting a repossession removed, explain your legal rights, and offer tips for rebuilding your credit after the event.
A repossession occurs when a lender takes back an item you purchased with credit due to missed payments. This negative mark can stay on your credit report for up to seven years. During this time, it can lower your credit score and make it difficult to qualify for new credit. The repossession impacts your credit score by affecting the payment history and account status sections of your report — both of which are critical factors in determining your creditworthiness.
While a repossession can remain on your credit report for seven years, there are ways to remove it sooner or reduce its impact. Here are several methods you can consider:
The first step is to ensure that the repossession is accurately reported. Errors on credit reports are common, and if any part of your repossession is reported incorrectly (such as wrong dates, amounts, or payment history), you have the right to dispute it. Under the Fair Credit Reporting Act (FCRA), credit bureaus must investigate any disputed item and correct inaccuracies within 30 days.
Steps to dispute an inaccuracy:
Obtain your credit report from the three major bureaus: Experian, Equifax, and TransUnion.
Identify discrepancies related to the repossession.
File a dispute with the credit bureaus (online or via mail) with supporting documentation.
Wait for the results (investigation is typically completed within 30 days).
If the credit bureau finds that the information is incorrect, the repossession will be removed from your credit report.
If the repossession is accurate and valid, you may still have options. Many creditors and collection agencies are willing to negotiate a settlement or even agree to a "pay for delete" arrangement. This means that if you pay the debt in full or settle it for less than the owed amount, the creditor or collection agency agrees to remove the repossession from your credit report.
Steps to negotiate:
Contact the creditor: Reach out to the creditor or collection agency that reported the repossession and explain your situation.
Request "Pay for Delete": Ask if they will remove the repossession from your credit report in exchange for payment. Keep in mind that not all creditors will agree to this.
Get everything in writing: If the creditor agrees, get the agreement in writing before making any payment.
While this strategy may not always work, it's worth trying, especially if the account is old or if the creditor is willing to negotiate for future business.
A goodwill adjustment is a letter you can send to the creditor asking them to remove the repossession as a gesture of goodwill. This strategy works best if you’ve been a good customer before the repossession and can demonstrate that you’ve since improved your financial situation.
How to request a goodwill adjustment:
Write a Goodwill Letter: In your letter, politely explain your circumstances (financial hardship, job loss, etc.) and ask the lender to remove the repossession as a favor.
Be sincere: A sincere and respectful tone is important to increase your chances of success.
Follow up: If you don’t get a response, send a follow-up letter or call the creditor to reiterate your request.
Though goodwill adjustments don’t always work, especially for larger creditors, it can be effective if the creditor values your past business.
If you don’t want to dispute the repossession or negotiate with the lender, the repossession will naturally fall off your credit report after seven years from the original delinquency date. While this option is the slowest, it may be the easiest if the repossession occurred some time ago.
If you’re struggling to remove a repossession on your own, you may want to seek help from a credit repair company. These professionals can help you dispute inaccuracies, negotiate with creditors, and develop a strategy to improve your credit score. Just be cautious when choosing a credit repair service, as some companies may not be reputable or may charge high fees without providing substantial results.
If your repossession is inaccurate and the credit bureaus refuse to remove it despite being given proper evidence, you may have legal grounds for a lawsuit. Under the Fair Credit Reporting Act (FCRA), if the creditor fails to properly investigate disputes, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or take legal action to have the error corrected.
While removing a repossession from your credit report is important, it’s equally crucial to focus on rebuilding your credit. Here are some tips to improve your credit score after a repossession:
Pay all bills on time: Timely payments have a significant impact on your credit score.
Keep credit utilization low: Aim to keep your credit card balances below 30% of your credit limit.
Use a secured credit card: This helps you build a ,positive credit history.
Monitor your credit regularly: Stay on top of any new issues that may arise.
A repossession doesn’t have to remain on your credit report forever. Whether through disputing errors, negotiating with creditors, or using a goodwill adjustment, there are strategies you can use to minimize the damage or even remove the repossession from your report. It’s important to act quickly and use your rights under the FCRA to ensure that your credit report is accurate and fair. And remember, rebuilding your credit takes time and effort, but with the right steps, you can regain financial stability and open doors to better borrowing opportunities.
A repossession occurs when a lender takes back a vehicle or property due to missed payments. It is reported to credit bureaus and significantly damages your credit score.
Yes, a repossession can be removed if it's inaccurate or unverifiable. You can dispute it with the credit bureaus, negotiate a pay-for-delete, or request a goodwill adjustment.
A repossession typically stays on your credit report for 7 years from the date of the first missed payment leading up to the repossession.
A pay-for-delete agreement is when you offer to settle or pay the repossession debt and request the creditor to remove the negative entry from your credit report. Not all lenders agree to this.
Paying off a repossession won’t erase it from your report, but it shows responsibility and can help your score gradually recover over time.
Yes, if you believe the repossession is inaccurate or incomplete, you can file a dispute with the credit bureaus. They are required to investigate and remove it if it can’t be verified.