How Many Points Is a Repo on My Credit Score?

Let’s cut right to the chase: a repossession can inflict serious damage on your credit score. There isn’t a fixed, universally applied number of points lost due to a repo, because the exact impact depends on your individual credit profile. However, generally speaking, you can expect a credit score drop anywhere from 75 to 150 points, or even more. This makes repossession one of the most damaging events you can have on your credit report. The degree of the impact hinges on factors like your initial credit score, the recency of the repossession, and the overall strength of your credit history. The higher your credit score was before the repossession, the more points you’re likely to lose. Prepare for significant financial fallout.

Understanding the Credit Score Impact of Repossession

Beyond the raw numbers, it’s crucial to understand why a repossession hits your credit so hard. It’s not just a single event; it’s a cascade of negative signals sent to creditors.

The Double Whammy: Missed Payments and the Repossession

A repossession doesn’t just appear out of thin air. It’s the culmination of a series of missed payments. Those missed payments, usually 30 days or more past due, also get reported to the credit bureaus and also negatively impact your score. So, you’re essentially getting hit twice: first by the missed payments leading up to the repo, and then by the repossession itself.

Repossession as a Public Record

The repossession itself becomes a matter of public record, further cementing its negative impact. Lenders see it as a major red flag, indicating a high risk of lending to you in the future. This is particularly true in the immediate aftermath of the repossession.

The Lingering Effects

The bad news doesn’t stop there. A repossession will remain on your credit report for seven years from the date of the first missed payment that led to the repossession. While its impact lessens over time, it will continue to be a factor considered by lenders.

Rebuilding Your Credit After a Repossession

While a repossession is a serious blow, it’s not the end of the world. Credit can be rebuilt. It takes time, discipline, and strategic action.

Securing a Secured Credit Card

A secured credit card is a great tool for rebuilding your credit. You provide a cash deposit as collateral, and the credit limit is usually equal to the deposit. Making on-time payments on a secured card demonstrates responsible credit behavior.

Becoming an Authorized User

Becoming an authorized user on someone else’s credit card (with their permission, of course!) can also help. If the primary cardholder has a good credit history and uses the card responsibly, their positive credit history will be reflected on your credit report.

Consider Credit Builder Loans

Credit builder loans are designed specifically to help people with poor or limited credit establish a positive payment history. The loan proceeds are held in an account, and you make regular payments. Once you’ve repaid the loan, you receive the funds, and your payment history is reported to the credit bureaus.

Stay Current on All Other Bills

Most importantly, make sure you stay current on all other bills, including rent, utilities, and any other loans or credit cards. Demonstrating a consistent track record of on-time payments is crucial for rebuilding trust with lenders.

Frequently Asked Questions (FAQs)

1. Will paying off the deficiency balance remove the repossession from my credit report?

No, paying off the deficiency balance (the remaining amount you owe after the vehicle is sold at auction) won’t remove the repossession from your credit report. It will, however, show that the debt was satisfied, which is a positive step and may slightly improve your credit standing in the long run. The repossession itself will remain for seven years.

2. How does a voluntary repossession differ from an involuntary repossession on my credit report?

There is virtually no difference on your credit report. Whether you voluntarily surrender the vehicle or it is involuntarily repossessed, it’s still reported as a repossession. The impact on your credit score is the same. A voluntary repossession might save you some fees associated with the repossession process, but it doesn’t change the credit reporting.

3. Can I dispute a repossession on my credit report?

Yes, you can dispute a repossession on your credit report if you believe it’s inaccurate. You’ll need to contact the credit bureaus (Equifax, Experian, and TransUnion) and provide documentation supporting your claim. However, disputes are typically only successful if there are factual errors, such as incorrect dates or amounts.

4. What if the lender didn’t follow proper procedures during the repossession?

If the lender didn’t follow proper procedures, such as failing to provide proper notice before the repossession, you might have legal recourse. Consult with an attorney specializing in consumer credit law to discuss your options. While this might not directly remove the repossession from your credit report, it could provide leverage in negotiations or lead to a settlement.

5. How long does it take to rebuild credit after a repossession?

There is no standard timeline. It depends on the severity of the damage to your credit and the steps you take to rebuild it. It could take anywhere from two to seven years to fully recover. Consistent responsible credit behavior is key.

6. Will a repossession affect my ability to get a mortgage?

Yes, a repossession can significantly impact your ability to get a mortgage. Lenders view repossession as a high risk factor. You will likely need to wait several years, rebuild your credit diligently, and have a substantial down payment before you can qualify for a mortgage.

7. What is a “deficiency judgment,” and how does it relate to repossession?

A deficiency judgment is a legal judgment a lender can obtain against you if the sale of the repossessed vehicle doesn’t cover the full amount you owe on the loan, including repossession costs and fees. If the lender obtains a deficiency judgment, they can pursue further collection efforts, such as wage garnishment.

8. Can a repossession affect my ability to rent an apartment?

Yes, a repossession can affect your ability to rent an apartment. Landlords often check credit reports as part of the application process. A repossession on your credit report can make it harder to get approved for an apartment.

9. Is it possible to get a car loan after a repossession?

It is possible, but it will likely be challenging and expensive. You’ll likely need to seek out lenders specializing in subprime auto loans, which come with higher interest rates and stricter terms. Be prepared for a larger down payment and higher monthly payments.

10. Does bankruptcy eliminate a repossession from my credit report?

Filing for bankruptcy does not automatically eliminate a repossession from your credit report. However, it can discharge the debt associated with the repossession (the deficiency balance). The repossession itself will still remain on your credit report for seven years.

11. How can I check my credit report to see if a repossession is reported accurately?

You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. Review each report carefully for any inaccuracies.

12. If I cosigned a loan that was repossessed, how will it affect my credit?

If you cosigned a loan that was repossessed, the repossession will affect your credit just as much as it affects the primary borrower’s credit. As a cosigner, you are equally responsible for the debt. The missed payments and the repossession will appear on your credit report, impacting your credit score. Cosigning is a serious responsibility.