Does Car Repossession Have to Go on Your Credit If You Pay & Get the Car Back in Two Days?

You might be able to remove a car repossession from your credit if you quickly pay off the defaulted payments within a few days. However, the lender reporting a repossession probably isn't what causes your score to go down. You likely have several months of missed payments on the car loan at that point, as well as other accounts that have tarnished your credit report.

Identification

Whether a car repossession goes on your credit if you make a payment on it within two days depends on how fast the creditor sends data to the credit reporting bureaus. Lenders usually update once a month, so if you catch the lender before it sends off a batch of data, it might just report your repossession as a late payment.

Considerations

If the lender decides that you can't or won't pay the auto loan or lease, you've probably already missed several months of payments. Although lenders can repossess a car if you miss a payment by a few days, they usually wait a month. Lenders often don't want to repossess cars, especially recreational vehicles, because their resale value might be low, according to Justin Harelik of Bankrate. A 30-day late payment can hurt your credit score by 110 points or more, and a 90-day late payment by 140 points or more --- almost as bad as a bankruptcy. The actual effect of a car possession depends on your score when the lender reports the account as delinquent. If you had an average score of 680, forced repossession of property takes about 85 to 105 points off of your score; fewer points are deducted for lower scores.

Considerations

Even if a car repossession goes on your credit report, it only stays for seven years after the original delinquency. You can somewhat mitigate the effects of a car repossession by paying your other accounts on time and eliminating any other debt on the account. That way, the account has a note saying you paid the debt in full, which might give lenders a good impression even if you have a low credit score.

Tip

Talk to your lender if you think you might default on the loan. The lender could offer to change your contract to help you meet your obligation, such as pushing back the monthly payment due date. If you pay off the entire loan, get in writing how the lender plans to report the loan. Paying the entire balance off gives you the best chance for the lender to declare the entire account an error to the credit bureaus.