Any sort of rent is risky if you are not sure that you would be able to make the payments on time. When you get a vehicle on loan, you run even a greater risk as it can be repossessed if you don’t deposit timely installments and the repossession will show up on your credit report.
So how can you avoid this and, in other case, what can you do to remove repossession credit report? We will find that out here!
What Is Meant By Remove Repossession Credit Report?
Repossession takes place when you are unable to pay for the vehicle that you have rented.
When you don’t uphold the terms of the agreement, the lender would eventually take back the vehicle and this would be reported to credit bureaus.
Repossession can take place in two different ways:
1. If you give up the vehicle yourself then it would be termed as voluntary repossession. This is when a customers realizes that he will not be able to make the payments. You can take back the vehicle if you continue to make payments in future.
2. On the other hand, if a bank has to intervene and take control of the situation then this is often termed as repossession through bank and might not be a pleasant sight to see. The lender can send in a team with officials to consume the vehicle and this does not require that you are informed before hand.
Although both types of repossessions will affect your credit score in the same manner, voluntary repossession is still better in some regards.
For example, it would protect your dignity to some extent by letting the lender know that you realized and excepted your mistake. Eventually, it can help you negotiate better terms with financing company in the future.
3 Ways To Remove Repossession Credit Report
You should try your best to avoid such a situation but if a repossession takes place then the next wise step would be to look into how remove repossession credit report works.
Some methods do not require you to spend money, for example, negotiating with a lender and requesting for a degree of relaxation. On the other hand, some ways of getting a repossession removed from the report might be expensive.
First Step, Locate The Repossession On Credit Report
In any case, you have to identify the repossession before you can start working towards removing it. Surprisingly, some customers are not aware oh where to spot the repossession on their records.
Typically, negative items such as pending debts, repossession, and inquiries are listed in public records.
This section may be present at different spots in a credit report issues by different credit bureaus. If you are looking at an Experian credit report then you can find repossession at the top right corner.
You can always get in touch with customer support service online that can help you find what you are looking for.
1. Sign a Contract With Lender
The easiest, and most peaceful, method of removing a repossession is to get in touch with the lender directly and request him to settle the issue with you without the involvement of the bank.
The approach of negotiation is open whether you are working with individual loan companies or online finance companies.
This method works better if you opt for voluntary repossession. Like we discussed above, giving up the vehicle yourself would at least prove to the lender that you took responsibility for your mistake and are keen enough to work towards a solution.
You can strike up a deal with the lender, however, the repossession will not be immediately removed.
The toughest part of this method is that you need to know who is the right person to talk to. Some companies may be reluctant in getting you through to senior managers who have the authority to settle a deal. Stay patient!
2. Dispute Your Credit Report
If you have ever wished for a negative item to be taken off your credit report then you would already know how report dispute works. This is a common method that is quite helpful when you want to boost your credit score fast.
You can get in touch with different credit bureaus to get this job done. Here are some common addresses you might need in this regards.
- TransUnion Consumer Solutions P.O. Box 2000 Chester, PA 19016-2000
- Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30374-0256
- Experian Dispute Department P.O. Box 4500 Allen, TX 75013
Now the next question is:
How can a dispute help you in case of a vehicle repossession?
Well, the logic is simple, it can only be removed if the repossession has been reported wrongfully. Credit bureaus gather financial information to formulate a report. In some cases, errors can take place resulting in a negative item being added to your report.
It is also possible to dispute a data that is mentioned with a wrong date, account number, or balance. If you dispute turns out to be correct, the item will be taken off from your report in less than 30 days following which the score will be updated too.
However, if the authorities find that there is nothing wrong with the information on your records then you can not have it eliminated simply by filing a dispute.
3. Hire a Professional Company To Look Into The Issue
The last and the most reliable method is to hand things over to professionals. There are a number of reputable credit repair companies that can help you remove repossession from credit report.
Although they will take all the necessary steps that you could have taken as well, this is most convenient when you don’t have enough time to handle a dispute yourself.
You have to keep in mind that professional companies usually charge a lot for such services. On the other side, the money your spend here is less than the financial loss you might have to suffer if the repossession stays on your record for a long period of time.
Why Should You Be Working On Removing Repossession From Your Credit Report?
The affect of a repossession on your FICO score can be as damaging as having a long-term debt mentioned on your report, or even more!
Repossession is initiated if you can not make a due payments for the vehicle on rent for 3 to 4 months. Therefore, your credit history would mentioned that you had missed out on all these payments and we know what kind blow that would be for your overall credit standing.
Repossession Can Make Your Scores Fall By 100!
Yes, you heard that right! Repossession can strip you of 100 points immediately so you might be falling from a pretty good score to “meh, just average” in no time!
Once a repossession has made its way to your credit report, it can stay there for at least 7 years if you choose to do nothing about it.
This means your score will be in a pretty bad shape for such a long time.
That is why many financial experts suggest that you should keep a regular check on your credit report and make efforts to have any item removed that can be, on time.
The silver lining in the whole situation is that the repossession can actually be removed from the records by using one of the methods that we have discussed above.
Whether you choose to handle the situation yourself or get help from a professional, the main task is to do something about the problem at hand.
Remove Repossession Credit Report: Possible But Not Easy
It does not matter if you give up the vehicle yourself or the bank has to intervene, handling repossession will never be an easy job especially after it has been stamped on to your credit report in terms of missed payments over so many months.
In contrast, involuntary repossessions are embarrassing and may hurt more than just your credit score. That is why they must be avoided in any case. You should step up to take matter into your hands before financial company has to ask the court to intervene.
Moreover, the court is under no compulsion to send you a letter before sending in a team to consume the vehicle.
You must have been informed by the lender about missed payments and you should know that trouble will be on its way, if not sooner then later.
On top of that, you can not file a case of privacy breach if the team shows up uninvited. It is already expected that they would come with enough documents and proofs against you.
How To Avoid Repossession In Future?
You must be wondering that all this trouble can simply be avoided if you don’t let the repossession take place. True! Avoiding this situation should always be your top priority.
You can do so by managing resources to ensure that you can pay the installments on time.
Secondly, this matter should also be addressed at the time of drawing the loan agreement. You can convince the lender to settle terms that you can easily cater to later on.
This will be of huge help when you have to make payments in the future.
Before renting a vehicle, run a thorough check and understand how much you can comfortably pay.
This would help you avoid any uncomfortable event later on. Moreover, always be updated on the payment dates and terms. Sometimes, contracts are changed when the loan is on-going. If any such alteration is made, get it in writing to avoid any ambiguity and trouble!
The Bottom Line
So the happy news is that repossession can be removed using one of the methods that we have discussed above. However, since it is not an easy thing to do, you should avoid it at the first place by keeping in mind some of the tips that we have talked about in our article.
Hopefully, now you know how to handle a repossession and can do it easily in future. Best of luck!
Miriam Caldwell is a dedicated & expert freelance writer to educate people about personal finance management and budgeting. She shared her knowledge and published the articles at TheBalance.com, GOBankingRates, and BlissfullyDomestic.com. Many financial institutes pick Caldwell as the brilliant source for educational personal finance content.