Auto Credit
Repossession on Your Credit Report: What It Means and What to Do
A repossession hits your credit in more than one way. Here's how it's reported, what you may still owe, and how to start rebuilding.
Losing a car to repossession is stressful enough. Then comes the credit damage, and often a bill for money you still owe. Understanding how repossession is reported helps you limit the damage and spot errors.
How a repossession happens
When you fall behind on an auto loan, the lender can take the vehicle back, often without advance notice, depending on your state and loan contract. The lender then usually sells the car at auction.
How repossession shows up on your credit report
A repossession typically affects your report in several ways:
- Late payments leading up to the repossession.
- The repossession itself, noted on the auto loan account.
- A possible deficiency balance, often charged off or sent to collections.
The repossession can remain on your report for seven years from the date of the original delinquency.
Voluntary vs. involuntary repossession
A voluntary repossession, returning the car yourself, can save towing and storage fees, but it's still reported as a repossession and still hurts your credit. It isn't a way to avoid the credit impact, though it may reduce what you owe.
The deficiency balance
If the car sells for less than you owe plus fees, the difference is a deficiency balance, and you're usually still responsible for it. Lenders are generally required to sell the vehicle in a "commercially reasonable" way and send you required notices. If they didn't, you may have grounds to challenge the deficiency. Ask for an accounting of the sale.
Check the reporting carefully
Repossessions are complex and often reported with mistakes:
- The deficiency balance is wrong or doesn't reflect the sale price.
- Both the lender and a collector report a balance for the same debt.
- Dates are wrong, keeping the item on longer than allowed.
- Late payments are reported after the account was closed.
If you find errors, dispute them. See how to read your credit report.
If you're behind, call before it's repossessed
If you haven't lost the car yet, call your lender now. Options may include deferring a payment, modifying the loan, or refinancing. Selling the car yourself usually gets a better price than an auction, which reduces or eliminates a deficiency.
Know your rights
Repossession rules vary by state, including what notices lenders must send and whether you can get the car back by paying what's owed. The CFPB's auto loan resources explain your options.
Rebuilding and your next car
You can get another car loan after a repossession, but expect higher rates for a while. Build positive history first and read what credit score you need for a car loan and how to rebuild credit.
Want a professional review of how your repossession is reported? Request a free credit assessment from 30 Day Credit Pros.
Not sure which items on your reports are worth disputing? Our team will go over all three reports with you for free.
Get a Free Credit AssessmentFrequently asked questions
How long does a repossession stay on your credit report?
Up to seven years from the date of the original delinquency.
Does voluntary repossession hurt my credit less?
It is still reported as a repossession and hurts your credit. It may reduce the fees you owe.
Do I still owe money after my car is repossessed?
Often yes. If the sale price doesn't cover your loan balance plus fees, you may owe a deficiency balance.
Can a repossession be removed from my credit report?
An accurate repossession generally stays for seven years, but inaccurate or unverifiable information about it can be disputed and corrected or removed.