How long does a repo stay on your credit? This is one question you should have an answer to before you go on borrowing money from lenders. With that in mind, you will be propelled or even motivated to pay off your loans on time.
How Long Does a Repo Stay On Your Credit?
A repo or repossession as you should know only happens when a lender seizes the property of a borrower after they fail to pay back a debt. With that being said, continue reading to find out and learn more about what a repo is and the reasons why you should avoid one.
Now to answer the question we all have been waiting for, a repo or repossession stays on your credit report for a total of seven years beginning from the first debt payment that was missed that then led to the repossession in the first place. A repo in the credit world is considered a derogatory mark.
And usually, after a repo has taken place is not unusual to see the credit score if a person takes a substantial hit and drop. Even since credit scores comprise many factors, it is very hard to predict just exactly how much a repo could affect your credit. The effect in many cases could be huge enough to take you from excellent or very good credit to good or fair.
Tips To Easily Build Up Your Credit after a Repo
The steps to building back your credit after any derogatory mark can take a long time as well as invested effort, but that however does not mean that it is impossible. With that being said, here are a couple of tips to get things started.
Take Debt Inventory and Reach Out
You should look at all your credit cards, loans, and debts, as well as any other necessary bill payments. After that, you should get a sense of where you stand with each of your lenders and then calculate just how much you can afford to consistently pay every month. Once you have attained that very number, try reaching out to each of the lenders to communicate a payment plan so that they know just how you are making an effort to bring all past-due accounts current.
Pay Your Bills on Time
Now that you already know what you can afford to pay on a monthly basis, you should then set mandatory bills on autopay. And since payment history accounts for about 35% of your FICO credit score, kicking off a new track record of paying bills on time will eventually reflect very positively on your credit score.
Become an Authorized User
Having repossession to your name probably will not help you get approved for any other type of credit card or loan, especially just right after the action happens. But you should know that becoming an authorized user on somebody else’s credit card can help you rebuild your credit, as long as the card issuer in question reports authorized user activity to the three major credit bureaus.
You should however take note that if the account owner gets to overspend or misses payments that could also be reflected negatively on your credit. Becoming an authorized user usually is a very good and excellent idea only in the event that you and the account owner commit to good credit as well as payment habits.
Find a Credit Counselor
Lastly, it may make a whole lot of sense to use the service of a credit counseling agency, but the key here is to find a dependable one that understands your financial situation, as there are many illegitimate companies that are looking to scam consumers. The U.S. Department of Justice in question provides a state-by-state list of approved credit counseling agencies that may just be able to work with you in a bid to help repair your credit.
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