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Reviewed By:
Ashley Davison
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world every...
A repossession on your credit report is a serious negative mark, but it’s not always reported accurately. Here’s what it means for your credit and what you can do about errors.
When you default on an auto loan, the lender may repossess the vehicle and report it to the credit bureaus. A repossession is a major negative entry. For years, it can affect your access to new credit, the interest rates you’re offered and sometimes housing and job screenings.
Repossessions aren’t always reported correctly, though. Wrong dates, wrong balances, duplicate entries or a deficiency balance that doesn’t show a settlement are all errors the Fair Credit Reporting Act (FCRA) lets you dispute. You can dispute errors with the bureaus yourself for free.
Key Takeaways
In a 2013 FTC study, one in four consumers identified errors on their credit reports that might affect their credit scores.
A repossession can stay on your credit report for up to seven years, counted from 180 days after the first missed payment that led to it.
Inaccurate, incomplete or unverifiable repossession entries can be disputed under the FCRA, even if the repossession itself happened.
Paying a deficiency balance doesn’t remove the repossession, but the payment should be reported accurately.
How Long Does a Repossession Stay on Your Credit Report?
Under the FCRA, a repossession can stay on your credit report for up to seven years. The clock starts 180 days after the first missed payment that led to the repossession.
During that time, it can make new loans harder to get, raise your borrowing costs and complicate housing or job applications that include a credit check.
When a Repossession Entry May Be Eligible for Challenge
An accurate repossession generally stays on your report for the full seven years, because accurate information can legally remain for that period. But repossession entries can contain errors, and you have the right to dispute anything that’s inaccurate, incomplete or can’t be verified.
Common reasons to dispute a repossession entry include:
Wrong dates: The repossession date, date of first delinquency or reporting date may be wrong, which can change how long the entry stays.
Wrong balances: The balance or deficiency amount may not match what you owe or a settlement you reached.
Duplicate entries: The same account or the same collection may be listed more than once.
Accounts that aren’t yours: Identity theft or a mixed credit file can put someone else’s repossession on your report.
Unverifiable information: If the information can’t be verified, the bureau must correct or delete it.
The Deficiency Balance and Its Credit Implications
After a repossessed vehicle is sold, often at auction, the lender applies the money to your loan. If the sale brings in less than you owed, the rest is called a deficiency balance. The lender may collect it or sell it to a collection agency, which can add a separate negative entry to your report.
If you pay or settle a deficiency balance, the collection account should be updated to show that. If it isn’t reported correctly, you can dispute it.
How the FCRA Dispute Process Works for Repossession Entries
Once you file a dispute, the bureau generally has 30 days to investigate, up to 45 in some cases. The bureau contacts the lender or collection agency that reported the information and asks it to check. If the information can’t be verified, the bureau must correct or delete it.
You can file disputes yourself for free with Equifax, Experian and TransUnion. Include copies of documents that back you up, such as loan statements or a settlement letter, and keep copies of everything you send.
What Happens to a Credit Report Over Time After a Repossession
A repossession doesn’t freeze your score for seven years. As you add positive history, like on-time payments on other accounts and low card balances, those newer signals carry more weight. A repossession also counts for less as it gets older.
Secured credit cards and credit builder loans are common ways to add new on-time payment history after a major negative entry. How quickly your score changes depends on your full credit history.
Under the FCRA, a repossession can stay on your credit report for up to seven years. The clock starts 180 days after the first missed payment that led to it. If the entry has wrong information, such as an incorrect date or balance, you can dispute that error even if the repossession happened.
An accurate, complete repossession generally stays for the full seven years, and accurate information can legally remain for that period. If parts of the entry are wrong, such as the dates, the balance or a deficiency that doesn’t show a settlement, you can dispute those errors.
A deficiency balance is what you still owe on an auto loan after the repossessed vehicle is sold and the money is applied to your loan. The lender may collect it or sell it to a collection agency, and it may show up as a separate negative entry. If it’s reported wrong, you can dispute it.
No. Paying a deficiency balance doesn’t remove the repossession, which can stay for up to seven years. Paying can change how the collection account is reported and may stop more negative reporting. Check that your payment shows up correctly on all three reports.
Bottom Line on Repossession and Your Credit
A repossession can stay on your credit report for up to seven years, and an accurate entry generally stays that long. But repossessions and deficiency balances aren’t always reported correctly. Check all three reports for wrong dates, balances, duplicates or accounts that aren’t yours, and dispute anything inaccurate. Over time, on-time payments carry more weight.
Reviewed By:
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world everything she knows and learn everything that she doesn’t! Ashley is a FICO® certified professional, a Board Certified Credit Consultant, a Certified Credit Score Consultant with the Credit Consultants Association of America, UDAAP certified, and holds a Fair Credit Reporting Act (FCRA) Compliance Certificate.
