How to Fix My Credit After a Vehicle Repo

Lenders providing car financing usually include provisions in their contracts permitting vehicle seizure when borrowers miss a payment, according to the Federal Trade Commisson (FTC) website. This action is known as a vehicle repossession, and it remains on Experian, Equifax and TransUnion credit reports for seven years. Thus, a repossession lowers your credit score, making it more difficult to get other loans; however, you can mitigate the damage with some repair work.

Instructions

1

Send payments to catch up any other accounts with past due balances, recommends the My FICO credit score company website. Delinquent accounts and other payment-related information count for more than one-third of your credit score. Late payments hurt you, but the way to rebuild your credit is to bring your accounts current and make all future payments on time.

2

Pay any difference between the amount you owed on your repossessed vehicle and the amount the bank received from its sale. This is called the deficiency, according to the FTC website, and you are liable to pay. The unpaid balance hurts your credit score because it is viewed as a payment delinquency. The damage gets worse if the bank charges it off and sends it to a collection agency or sues you and get a judgment from the court.

3

Clean as many negative accounts off your credit reports as possible. The FTC website advises ordering credit reports from annualcreditreport.com. The Fair Credit Reporting Act (FCRA), mandates this site, which gives a free report every 12 months. Find entries with errors and dispute them with the credit bureaus. Divorcenet, a legal website, explains that the bureaus must erase the information if it the reporting creditor cannot verify the information.

4

Buy things with your other credit accounts, but only spend as much as you can afford to pay back promptly. MSN Money website writer Liz Pulliam Weston explains that you need to use credit to fix your damaged history. Get a secured credit card if the repossession was not your only problem and your creditors closed your other accounts. You put money in a bank account, and the card issuer extends a credit line for the deposited amount, which acts as collateral.