How to Rebuild Your Credit After Repossession

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Having your car repossessed can have a negative impact on your credit history and stay on your credit report for up to seven years from the original delinquency date.

According to Experian, a repossession can affect your credit history in a few different ways:

  • Late car payments
    Missed car payments leading up to the repossession can have a negative impact on your credit. Before repossessing your vehicle, the finance company or auto lender will typically report your initial late car payments that led to the default and repossession.

  • Default
    Since a repossession is a sign that you didn't pay your debt as originally agreed, the finance company or auto lender will report that you defaulted on the car loan, which Experian says can negatively impact your credit score even more than the late car payments.

  • Collections
    If there is still a balance on your auto loan after your vehicle has been repossessed and sold by the finance company or auto lender, they may send that portion of the debt (known as a deficiency) to a collection agency if you are unable to repay it, which can also negatively impact your credit score.

If your credit history has taken a hit due to repossession, here are some steps you can take to start rebuilding your credit:

  1. Check your credit report.
    Monitoring your credit report is important to ensuring your credit history is accurate. You can get a free copy of your credit report from each of the three major credit reporting bureaus—Equifax, Experian and TransUnion—at If there are errors found on your credit report, disputing them can help improve your credit.

  2. Pay your bills on time, if possible.
    Making on-time payments is one of the most effective ways to rebuild your credit. Even if you can only pay the minimum balance, do your best to stay on top of your monthly payments.

  3. Get a co-signer.
    A co-signer may be brought on as an additional repayment source for a loan, enabling you to obtain financing terms you might not otherwise be able to obtain. However, before you get a co-signer, you both should understand that the co-signer is responsible for the amount owed if you don’t pay.

  4. Keep your credit balances low.
    Although having a credit card is good for establishing credit history, credit agencies such as Experian advise keeping your use of credit to no more than 30 percent of your total credit limit.

  5. If you’re looking to purchase another vehicle, apply for subprime financing.
    If you’re in the market to purchase a vehicle, subprime financing is available to consumers with bad credit or no credit. Car dealers enrolled in the Credit Acceptance auto finance program can approve you for financing regardless of your credit history. And, since we report to the three major credit bureaus, you have an opportunity to improve your credit history by making on-time car payments.

If you are taking steps to rebuild your credit and are in the market to purchase a vehicle, a dealer enrolled in the Credit Acceptance program can help. Simply fill out the form on our website to start your credit approval today!