How to Rebuild Credit After Repossession

Skipped or late payments contribute to a low credit score. Additionally, experiencing a repossession can damage your score and make it harder for you to obtain future financing. To qualify for a future car loan or mortgage, you'll need to rebuild your credit history and maintain a high score.

Instructions

1

Dispute credit report errors. Credit report errors reduce your credit score. If you're trying to rebuild your credit history after a repossession, dispute inaccurate information. Contact the reporting creditor or write the credit bureaus.

2

Obtain a secured credit card. You probably won't qualify for a credit card immediately after a repossession. However, having a credit card is a quick way to boost a low score. Contact your bank or credit union and apply for a secured card. Lending institutions require a deposit before issuing a credit card.

3

Maintain your existing credit accounts. If you already have a credit card, mortgage loan or another credit account, maintain these accounts by submitting on-time payments. To add points to your score, pay down your debts.

4

Negotiate with the auto lender. After repossessing a car, lenders auction off the vehicle and use the funds to pay off the loan. Oftentimes, auction proceeds aren't enough to pay off the loan. Contact the auto lender and agree to pay off the remaining balance in installments. As a courtesy, the lender may not report the repossession to the credit bureaus.

5

Apply for a personal loan. Using collateral such as a vehicle title and a co-signer apply for a secured personal loan. Rather than spend the funds, deposit the money into a savings account, and then pay off the loan within six months. Making timely payments and satisfying the debt adds points to your credit score.