Does a Repo Affect Your Credit if You Get the Vehicle Back?

A repossession affects your credit even if you pay to get your car back. It's unlikely a lender will repossess your vehicle the day after you miss your payment, so your negative payment history has already been reported to the credit bureaus. Late payments and repossession both affect your credit.

Dealing With Your Lender

Ask your lender directly if it reports the repossession to the credit bureaus after you pay to have your car returned. Not all lenders report the event if you catch up on the loan payments, collection and repossession fees. If so, ask the lender to retract the repossession reporting. If you can refinance the vehicle with another lender, offer to pay off the loan in full to reach a compromise. Refinancing your loan might prove difficult if you are past due on your payments so you made need a co-signer.

Credit Score and Report

If the lender reports the repossession, your credit score drops significantly. If the repossession isn't reported, your credit still suffers from a decreased score and negative credit history because of late payments. Your credit report states in-depth information about your car loan. For example, your report states the opening balance for your loan, current balance, number of payment's you've made, term of the loan and the number of times you've been late on your payment. The repossession shows as a loan reinstatement.

Credit Consequences

Because of late loan payments and the possible repossession reporting, you might be declined for future credit opportunities, such as credit cards, auto loans, a mortgage and personal loans. Or, you might obtain an approval, but for a restrictive loan or a limited line of credit. To minimize risk, a lender might approve a future loan, but for a short term or a high interest rate, which increases your loan payment. Interest rates are as high as 29 percent in some states.

Re-establishing Credit

After you pay to get your car back, re-establish your credit rating by paying all of your accounts on time. Keep your credit balances lower than your credit limits and create payment histories on your accounts. For example, keep paying your current lender; don't refinance the loan soon after. Maximizing your loan and credit balances decreases your credit score and affects your debt-to-income ratio. Even though the loan information remains on your credit report for seven years, you can still improve your credit by paying your long-term accounts on time.