Getting your car repossessed can be devastating and can have lasting impacts on your credit score. It may take years for the derogatory mark to fall off your report, but that doesn’t mean that you can’t clean up other areas of your credit report to increase your score. Here’s how you can fix your credit score after car repossession.
Assess The Damage
Check your credit score after repossession of your car to see where you’re at. Once you know the damage, you can start to rebuild. Make sure that your report looks correct and dispute any inaccuracies. Car repossession will stay on your report for seven years after your first missed payment. Since you’ve probably missed several payments, it will take time to rebuild your on-time payment history. Make sure that you are paying all your other bills to the best of your ability and try to get caught up on any missed payments or accounts in collections.
A loan default will also show up on your report. Additionally, if the lender sells the car but doesn’t recoup the remaining loan amount, you’ll have what’s called a deficiency balance. This balance that you owe may be sent to collections if you can’t pay it, further damaging your score. While there is little you can do to get rid of these negative marks, you can work to recover after your car repossession.
Reduce Your Credit Utilization
Credit utilization is measured by available credit and your card balances. If you reduce your credit utilization to below 30%, your score will increase. Your balances are typically reported monthly, so this is a quick way to see improvement in your score. You can also become an authorized user on someone else’s card to grow your available credit, without opening new accounts. You may also want to consider a secured card to rebuild your credit.
Improve Your Score with Other Tools
You may benefit from reporting non-debt payments like utility bills, rent, or phone bills. Make sure that you pay these accounts on time before reporting. You can use tools like Experian Boost to facilitate this process and see an increase in your score.
How Long Does It Take to Rebuild Credit After Car Repossession
There’s no one-size-fits-all answer to this question. If your loan default is the only issue on your credit report, your score may be able to recover more quickly. If you have any other issues, it may take more time to see improvement. The bottom line is that you’ll need to continue to track your progress and work toward improving your score each month, maybe for several years. However, it is possible to recover and you will be able to demonstrate your creditworthiness to lenders even after a car repossession. Don’t worry even after financial hardship, you can achieve financial stability.
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