How Will Auto Repossession Affect My Credit Rating?
January 15, 2010 by Amber Deanwater
Filed under Credit Repair
Auto repossession in and of itself is not a good thing and will severely affect your credit score. Please read this article completely to discover how auto repossessions come about and what can be expected.
To begin with, you can face repossession after missing one or more payments on your vehicle loan. Despite popular belief, if you miss just one loan payment, the creditor can legally move to repossess your vehicle. It is not necessary for multiple payments to be missed. The creditor will usually make calls to you and send one or more letters.
Your creditor may begin the process to repossess your vehicle if you do not contact him and try to work out a payment schedule or, if you have the money, bring the account current. You may be able to stop the repossession if you work with your creditor. If you are successful, you will be able to retain possession of your vehicle and keep your credit rating intact.
Depending upon the state you live in, your credit rating could be affected for seven to ten years. If this were to happen, your credit rating would be seriously damaged and it would be difficult at best to obtain any kind of credit.
If you see an auto repossession in your future, it would be wise to contact your creditor to discuss your options. Typically, creditors would prefer to work out an arrangement than repossess your vehicle. This would shelter your credit score from a big hit.
It is most likely that you will be responsible for paying any towing charges, storage costs, repossession fees, and additional costs resulting from the repossession. Often, these costs can skyrocket to several hundred dollars.
Auto repossession is not a pretty thing and it is important that you understand this. If you see an auto repossession ahead and do nothing to try to turn it around, you will greatly harm your credit score as well as lose your vehicle. So, call your creditor and see if you can work out a payment plan. If successful, this will result in your keeping your vehicle and not damaging your credit rating.
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