How to Fix Your Credit After a Car Repossession
When you’re first driving away with a brand new car, everything may seem just peachy. However, this can all change when something comes up, such as a maintenance issue or a job loss that causes you to stop turning in your car payments. Before you know it you may find your car getting repossessed as a result of all those missed payments. Unfortunately, car repossessions will stay on your credit report for seven years after the original date of delinquency. This can negatively impact your credit for the length of the seven years, however the impact will lessen over time. Additionally, there are some steps you can take in order to repair your credit.
Look at a Copy of Your Credit Report
You can obtain a free copy of your credit report from the three major consumer credit reporting companies—Experian, Transunion and Equifax at annualcreditreport.com. Once you’ve obtained a copy, ensure that you carefully analyze it in order to verify that all of the information listed is correct when it comes to the repossession of your vehicle. If you find anything that is incorrect then you can dispute it by getting in contact with the credit bureaus. You can do this by sending them a letter or by completing a dispute form that can be found on the credit bureau’s website. If the information is found to be inaccurate it will be removed from your credit report.
Get Into Contact with the Financial Lender or Collection Agency
Get into contact with the original collection agency or financial lender about the repossession of your vehicle. Attempt to negotiate a payment plan or settlement offer with them for the balance that you owe. After the balance is paid down in full, the information will be passed down to the credit bureaus, which will update it in their system, which will raise your credit score.
Speak to a Certified Credit Counselor
You can get into contact with a Certified Credit Counselor, which you can locate at the CCCS website. Even if you had success in negotiating a settlement offer or payment plan with your creditor, it can be very beneficial to seek out the help of a professional. A credit counselor will be able to assist you in removing the negative marks caused by repossession on your credit history, as well as with managing your debts and creating a financial plan that will allow you to avoid any future problems with your finances.
Open a Secured Credit Card
You can work to rebuild your credit by opening a secured credit card through a credit union or bank in order to get positive information on your record. You can easily open a secure credit card by creating a savings account with a financial institution. Once you’ve deposited some money into your account, the funds will determine the amount that’s available as credit on your card.
Keep Up to Date on Payments
If you currently are using credit cards then ensure that you make all payments on time and in full if possible. This will ensure that your credit card steadily increases. Otherwise, making late payments on your existing credit cards will only make your credit score problem worse.
Negotiate with Your Auto Lender
Attempt to make a deal with your auto lender before you completely stop making payments on your car loan. Call the financing company and discuss your situation. Keep in mind that financial companies extend loans with the idea that they’ll get all of their money back plus interest. In most cases when a car is repossessed, the vehicles are sold in an auction for half of their contractual obligation. Because of this, financial institutions would rather skip this, and so they are likely willing to arrange a deal, and perhaps even extend your loan.
Talk to an Attorney
If the reason that you stopped making payments in the first place was due to the fact that you felt misled about your car’s condition then it’s a good idea to get into contact with an attorney. In many cases an attorney can help resolve the issue without your credit being affected by a situation that isn’t your fault.
Rebuild Your Credit
If your vehicle has been repossessed than it will take some time for you to fix your credit score. If you require another car in order to get to work while you’re working on rebuilding your credit then you should look into financing companies that give financing to people who have dealt with repossessions. Although the interest rates are usually substantially higher than a regular car loan due to the fact that it is a higher risk loan, if you are able to make steady payments on it then it can in fact raise your credit score.