How to Clear a Reposession From Credit

If you purchase a car with a loan from a financial institution and then do not pay on the loan, or default on the loan, then they have the right to claim the vehicle. When they repossess the car, it could remain on your credit report as such. The lender can sell your vehicle to recoup some of their costs, but may still charge you with any leftover balance on the loan. A repossession can be extremely harmful to your credit score.

Instructions

1

Contact the lender to see if and what your balance is. If they were able to auction your car off, they will credit that to your account, but chances are that you will still owe what is left. If you can make payment arrangements, or even pay off your balance, then the lender may take the account off of your credit report. If they agree, draft a letter or have the lender draft a letter saying that they will remove the item once paid in full.

2

Purchase or otherwise obtain a copy of all of your credit reports. There are three credit bureaus that you will need to get your report from. Check to see if the repossession is on these files. If you have finished making payments and the repossession remains, send the credit bureau a copy of the letter from the lender and your proof of payments to have it removed. If you have not made payments, you may still be able to have it removed.

3

Dispute the repossession on your credit file. If you have access to the Internet, you can do this step online. If not, call the credit bureau and request the paper dispute to be mailed to you. The lender has 30 days to verify that the debt is correct. If they do not verify it, then even if you legitimately owe the debt, the credit bureau is obligated to remove it.

4

Check your credit report after 30 days. If it has not been removed, you can dispute it. If the lender does not verify the disputed item in time, it will have to be removed from your credit file.