How Long Does a Car Repo Stay on Your Credit?

Your credit report is important because it summarizes your demographic information and payment history for various loans and accounts, including car loans. If you get into financial trouble and your car gets repossessed it will show up on your credit report for a certain length of time. It's important to know the length of time and to make sure that it is not reported beyond what is allowed.

Definition

When you get a car loan it is secured by the vehicle you are purchasing. This means that the lender can take the car if you do not make your payments as agreed in the loan documents. This is known as a repossession. Not only do you lose your vehicle, but you are also liable for the difference in the amount you owe and the amount for which the lender can sell the vehicle. The reposession will also show up on your credit report as a piece of negative information.

Timeframe

A car repossession will stay on your credit report for seven years. The Experian credit bureau says that the seven-year period starts from the first delinquency date of your car loan.

Effect

Having a car repossession on your credit report will have a negative impact on your ability to get other loans or open credit card accounts. It may also have an effect on getting a job or an insurance policy. Lenders and others who review credit reports consider all of the information. However, a recent repossession can have quite a lot of weight against you because it usually indicates serious financial problems.

Extension

The timeframe may be longer if the lender take you to court. If it wins a judgment against you, the repossession will stay on your credit report for seven years from the date of the judgment.

Impact

A car repossession will have a negative impact on your credit report for the entire period in which it remains on record. However, according to Experian, the negative effect lessens over time if you continue to pay your other bills promptly and don't run up big balances on your accounts. Once seven years passes and the repossession is removed from your reports, there will no longer be any effect on your report.

Follow-Up

Although the car repossession should automatically be removed from your credit report once the seven-year period has passed, sometimes this will not be done. Get a copy of your credit report from each of the three major credit bureaus once the time is up. You are entitled to an annual copy at no cost from Experian, Transunion and Equifax. If the car repossession shows up on any of the reports, submit a dispute challenging the information on the basis that it is out of date. Follow up in 60 days to make sure that it has been removed.

References

• Experian information