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How To Remove A Repossession From Your Credit Report

Written by Mike Pearson
Updated October 5, 2022

In A Nutshell

The best way to remove repossession from your credit report is to negotiate the payment terms with your lender. You can also choose to file a dispute, try the “gap insurance” method, or hire a credit repair company.

In over ten years of helping people improve their credit, I’ve always stressed the importance of getting a repossession removed from their credit report.

And having personally tried the methods outlined below, I’m going to share the best way to get a repossession removed from your credit report.

Let’s get started.

  • Negotiate your payment terms with the lender. If you can convince the lender that you’re capable of making on-time payments with a lower monthly cost, they may give you a second chance. Easier said than done.
  • File a dispute to get it removed. If you think the repossession was reported in error, or inaccurate in some way, you could request that the credit bureaus remove it from your credit reports by filing a dispute. 
  • The “gap insurance” method. If your loan has gap insurance, and your car was sold at auction after a repossession, and the balance was sold to a collection agency, you can try using the gap insurance method (more details below).
  • Hire a credit repair company to do it for you. If you hire out for help, a credit repair company can use their expertise and resources to try and remove the negative information for you, though there are no guarantees, and it will cost you a fee, using this option.

Let’s walk through each of these options so you can decide on the best recourse for your specific situation.

How can I remove a repossession from my credit report?

The Fair Credit Reporting Act (FCRA) requires that negative marks like repossessions be accurate. For example, if your account was sent to a collection agency because of a misspelled address or because of fraud, it should not appear on your report.

Only real past-due accounts can be listed. And they can only appear once, not twice. If the repossession was an error, you should dispute it right away.

1. Negotiate your payment terms with the lender

If they’re feeling generous, the lender can allow you to negotiate the terms anew so that you can continue with your payments in exchange for the lender agreeing not to report the repossession.

You will have to convince them to allow you to retain the car and maybe reduce the monthly payments so that you pay for an extended time. 

If they want your business enough and feel like giving you a second chance, they can contact the credit bureau and remove the repossession items from your report. 

Just be sure to get any guarantees in writing, so you can dispute the entry if you find it hanging around your report later on.

2. File a dispute to remove it

If you believe the repossession on your credit report is inaccurate or incorrect information, you can file a dispute with the credit bureaus (Equifax, TransUnion, Experian) to remove the item. This involves writing a letter and mailing it to the bureaus via certified mail.

If the lender cannot prove that the information is valid or fails to respond to your claim within 30 days, the item be removed from the credit report. If they fail to do so, you can contact the Federal Trade Commission (FTC) to help you out. 

We have a full guide to filing a dispute here, but here’s a quick breakdown:

  • Order your credit reports and review them for accuracy. You can get your free credit reports from, from the three big credit bureaus: Equifax, TransUnion, and Experian.
  • Jot down any errors on your credit report. What you’re looking for here are any errors, even small ones, such as misspelled names or incorrect dates.
  • Gather your documents. You’ll need to prove the information on your credit report is false, so you’ll need to get together the evidence. This can include account statements and the correct account information.
  • Mail your dispute via certified mail while requesting a return receipt. Send your request to the appropriate credit bureau. They must investigate the dispute within 45 days and report back to you with their findings.
  • If the lender cannot substantiate the information, then the credit bureaus must remove the repossession from your credit report.
  • If the lender is able to substantiate the information, then the credit bureaus will keep the repossession on your credit report.

3. Use the “gap insurance” method

If your car loan has gap insurance, and your car was sold at auction after the repossession, and your balance was sold to a debt collector, then you may want to try the gap insurance method.

Here’s how it works.

If you financed your car at the dealer, chances are, you purchased gap insurance.

If your gap insurance covers the life of the vehicle, a prorated portion of the vehicle is covered during a repossession.

And when this happens, the refund of the prorated version is sent to the financing company.

Typically, the financing company will receive the gap insurance payment after the account is sold to a debt collection agency.

And—importantly—they never update the actual balance of the loan on your credit report.

And if they never updated the balance, that means the balance is inaccurate. And if it’s inaccurate, then you can dispute it.

  • Send a debt validation letter to the debt collection agency via certified mail, with a return receipt. Likely, they’ll respond with an inaccurate balance (because they did not take into account the gap collection payment).
  • Call your gap insurance provider and inquire about getting a refund of the pro-rated part of your payment. If they tell you the payment has already been made to the financing company, ask them to send you proof via a receipt for the payment.
  • Send a letter to the credit bureas explaining that the balance on your credit report was not accurate, demanding deletion. Supplement your letter with a copy of the receipt from the gap insurance provider and the response received from the collection agency showing the wrong balance.

Granted, a lot of things have to go right for this method to work, but it has been proven to be very successful.

4. Hire a credit repair company to do it for you

If you don’t feel like negotiating with lenders or filing paperwork with the credit bureaus, you can hire a credit repair company to do all the work for you.

We recommend going with Credit Saint, who has helped thousands of clients.

They’ll likely end up following many of the same steps and using the same techniques, but they do have the experience and resources that you likely don’t have, which may work to your advantage.

Just know that there’s no guarantee they’ll be able to get the repossession information removed from your credit report and that it will cost you a fee, around $69-$99 per month for most credit repair services.

What is a repossession, anyway?

If you’ve ever fallen behind on your car payment for too long, you probably know what a repossession is—it’s when the car lender takes back possession of the car, sometimes without your permission or court order, because of those missed payments. 

What gives the lender the right to seize your car?

Well, when you signed up for your auto loan, you might remember signing a lot of paperwork with the lender that contained certain terms and conditions—and one of those conditions gives the car lender the legal right to repossess your car if you fail to make your payments.

It’s important to know that these creditors don’t have carte blanche authority, however—most states have laws that govern how your creditor may repossess the vehicle, so it might be worth contacting your state Attorney General if you feel you’ve been mistreated.

What does the repossession process look like?

Did you know there are actually two types of repossessions?

One is “voluntary” and the other is “involuntary”.

A voluntary repo is when you proactively give your car back to the lender because you can no longer make the payments. A voluntary repossession also negatively impacts your credit score.

But the much more common type, and the focus of this guide—involuntary repossession—is when the lender comes to take the car back.

The process for an involuntary repossession is relatively straightforward and generally looks like this:

  • You default on your loan or lease. Once you fail to make a payment with the lender, the repossession process begins and the lender is typically within their rights to take action to get the car back.
  • The lender comes to take the car back. Once you’ve defaulted, most states allow the lender to seize the car, without notice or your consent. They will usually take any documents or signed contracts with them as evidence and then sell the vehicle at auction. 

That’s pretty much the entire process, but there are a few important details to remember as a consumer:

  • When seizing the vehicle, the lender may not commit a “breach of peace”—no physical force or even threats of force are permitted.
  • If your creditor agreed to change your payment date at any time during your loan, the original contract may be invalid—just make sure you have the change in writing.

How to spot a repossession on your credit report

Repossessions are typically listed under the public records section of your credit report. 

For example, on the Experian credit report, they give you a snapshot of your record right at the top—in this example, you can see there are zero public records, but if you have a repossession, the information would likely appear here:

If you’re unsure how to read over your credit report and what things you should look for, you can check out our guide on how to read your credit report

Don’t have a copy of your credit report yet? You can get them for free in less than ten minutes. The first step is to visit Annual Credit Report.

Note that both voluntary and involuntary repossessions will appear on your credit report—so just know you don’t get a pass if you decide to voluntarily give up your car.

How long does it take a repossession to come off my credit report?

If you don’t do anything about it and just leave it, a repossession will stay on your credit report for up to seven years.

Obviously, this is a situation you want to avoid because having a repossession on your credit report that long will impact your credit score the entire time. That’s why we recommend trying one (or all three) of the options we mentioned earlier. 

How will a repossession affect my credit score?

A repossession will negatively affect your credit score, likely significantly. A lot will depend on your personal credit situation.

Repossessions can affect your credit in many ways:

  • Repossession: If your car has been repossessed, the lender will report it to the credit bureaus. Not only will future lenders see this repossession, but it will likely lower your credit score a lot.
  • Late payments: Items can be repossessed because you missed several payments. Those missed payments will likely show up on your credit report and hurt your credit.
  • Collections: Your lender has the option of handing over your account to a collection agency. That collection will appear on your credit reports and damage your credit score.

All of these negative items can greatly affect your credit score.

Do you still owe money after a repossession?

Bad news: yes, a lender can still try to recoup the money you owe on your car (known as a “deficiency balance”).

Once the lender repossesses the car, they often try to resell it to get some of their money back. But since cars are a depreciating asset, they won’t be able to recoup the full amount of the loan.

In this instance, the lender will come after you for the balance owed.

Can I get a car loan after a repossession?

Let’s put it this way: if people do find a lender willing to take a shot on you by giving you a car loan while you have a repossession on your credit report, the interest rates they’ll offer you will be astronomical. 

The best approach, all things considered, is to deal with the repossession first to remove the item before trying to get a loan for another car and potentially falling further into debt.

How to prevent repossessions in the future

The easy answer here is that to prevent your vehicle from getting repossessed again down the line, you just need to pay your car loan on time. And that is true.

But the deeper issue here is probably your budget or your income or some combination of the two. Because at the end of the day, when you go late on paying off a debt, it’s either because you’re spending more money than you take in, or you’re simply not making enough money to finance your lifestyle—or likely both.

Here are some tips for making sure you stay out of debt and don’t find yourself in this situation again: 

  • Only take on a monthly payment you can reasonably afford.
  • Make sure to include a line item in your monthly budget for your car loan.
  • If you find yourself falling behind on payment, try to restructure the loan with the lender—some of them may be understanding.
  • If you can’t restructure the loan, return the car and pay off any outstanding debt as soon as possible

Are co-signers responsible for a repossession?

If you got someone to co-sign on your car loan and the car gets repossessed, they could be on the hook for the remainder of the loan amount.

The co-signer does have some legal rights in the case of the original borrower not being able to pay off the loan.

How to improve your credit report after repossession

If you have had a repossession on your credit report, there are ways that you can improve your credit score.

One way is to make sure that you keep all of your bills current and up to date. You should also make sure that you do not have any late payments on your credit report.

Another way to improve your credit score is to get a copy of your credit report and check it for errors. If you find any errors, you can dispute them with the credit bureau.

You should also make sure that you have a good credit mix on your credit report. This means that you should have both installment loans and revolving loans on your credit report. Having a good credit mix can help improve your credit score.

You can fix your credit by taking out new, smaller loans that you can repay in installments. This is helpful for people who have just filed for bankruptcy.

Finally, you should try to keep your credit utilization low. This means that you should not have more than 30% of your total available credit used at any time.

Wrapping up

Let’s face it: no one wants to get their vehicle repossessed and have their credit score damaged as a result.

You do have a few options to remove a repossession from your credit report—a credit repair company will be the fastest, easiest choice, though it will cost some cash.

If you want to go the DIY route, you can try either negotiating with your lender or disputing the item with the credit bureaus.


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Mike Pearson

Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in Investopedia,, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.