Being late on your car payment could have dire consequences. If your payments to your lender are delinquent enough, your lender may opt to repossess the vehicle. The repossession will then appear on your credit report for future lenders to view.
Facts
When a car is repossessed, that fact will appear in the trade line for the original auto loan on your credit report.
Features
A repossession is a negative notation on your credit report and, as such, will result in a lower credit score.
Time Frame
The Fair Credit Reporting Act sets the time period for reporting repossessions at seven years. Thus, a record of the repossession will remain on your credit report until the trade line documenting the original loan is removed.
Considerations
A repossession may have a different effect on your credit score depending on which type of credit report a lender pulls. An Auto Industry Option score, for example, places a greater emphasis on your payment history to vehicle lenders. Thus, this credit score would be lower than a standard credit score.
Warning
If your vehicle is worth less than what you owe to your lender, it may sue you for the difference. The judgment that follows will also appear on your credit report as a negative entry.
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