For many, your credit report can be an excellent method of proving your creditworthiness to car dealerships, mortgage companies, and more. But, if you don’t make payments on time or have delinquent accounts on your credit report, it can quickly spiral into a huge negative impact on your life. Unpaid assets can result in repossessions on your credit report which can keep you from buying a home, receiving emergency funds, and more.
Repossessions are something you don’t want to have appear on your credit report. Unlike a missed credit card payment or an overdue phone bill, it’s a huge strike to your credit score and shows you in a negative light to most who look at your report. Typically, repossessions (when a loan company takes back the asset that they have loaned you money to buy, such as a car or home) occur after multiple missed payments and are difficult to have removed from your credit score. However, it is not impossible.
Here are a few methods to review that may help you get that repossession off of your credit quickly:
- If the repossession that has appeared on your credit report is NOT yours or you think it is unfair, here’s what to do:
- File a dispute with the credit bureau. The credit bureau will have to investigate the case and it will be up to the lender to prove that you are the creditor that they think you are or that your repossession was a fair one. If not, it can be removed.
- Always keep track of any errors on your credit report and dispute them right away. If you cannot afford to open an account with a credit bureau, you can apply for one free report a year from Annual Credit Report. There are also some banks that include monthly credit reports as part of their offerings.
- If you have gap insurance on your car when it has been repossessed, then the prorated portion of the car that is sold to a third-party debt collector becomes a loss for you and is never updated as such on your credit report (only ever showing the whole balance owing). In these instances, you can (a) request the third-party collector to update/validate the debt. If this isn’t the updated amount, reach out to the gap insurance company and ask for a refund for your loss. If they’ve already paid it to the finance company, ask for a letter of proof and a receipt. You can then send this to the credit bureaus with any other relevant information and ask for it to be deleted from your credit.
- Speak to the lender or collection agency that has control of your account. See if you can come up with a payment plan or deal that would include their request to the credit bureau to have your repossession removed. Remember to speak kindly and be considerate. You want the lender to feel guilty or connect with you in order for them to go out of their way to help.
- If you financed your car at a dealership as a credit sale using a third party instead of creating an installment loan with the dealership itself, you may be able to delete the repossession from your credit report based on a technicality. Write a dispute letter to the credit bureau letting them know that the debt is listed as an installment loan but it is actually a credit sale and that you’d like it deleted from your report. In most cases, the bureau will delete it. If not, you can hire a lawyer to help sue the bureau for allowing incorrect information to be reported on you. It may even lead to you receiving funds back.
- If you know the car that has been repossessed has been sold at auction (they usually are) and you are still receiving late payment notices, you can dispute this. There should not be late payments being reported to the bureau after your car has been repossessed.
- If all else fails and none of the above tactics relate to your situation, you can try to make payments on your defaulted loan so that it will appear as “paid” on your credit report.
It will take 7 years for the repossession to be fully removed if you choose to wait. During this time it can continue to negatively affect your credit score. If you’re in the midst of a possible repossession, it’s important to note that whether or not the repossession is forced or you choose to give up the asset you have on loan, it will appear the same on your credit report. The best option is to communicate with your lender to come with a plan before it hits your credit.
Do you have a repossession on your credit report and want our help removing it from your credit? Reach out to a conversation with LEAF credit solutions for a free consultation.
CEO & FOUNDER
Aazim Sharp is the founder and CEO of Leaf Credit Solutions, a national credit restoration company. He has invested the last twelve years of his life learning everything that he could about the American credit system – from how to remove negative accounts from credit reports to credit score optimization. Aazim is the author of The Ultimate Credit Repair Guide and he teaches continuing education classes on credit. When he is not busy helping clients resolve credit issues, Aazim enjoys weekend getaways with his wife and kids.