 TITLE: Repair Your Credit After Repossession CONTENT: Repairing Credit After Repossession in 3 Easy Steps\n---------------------------------------------------\n###### Written by: Kristy Welsh\n_Last Updated: September 23, 2017_\nAs though it’s not tough enough losing your car to a repossession, your credit takes a huge hit, too. How much of a hit depends on how high your credit score was before the repossession. According to Bankrate, you could be looking at losing anywhere from 60 to 240 points. Needless to say, repairing credit in the wake of that damage needs to be a top priority. Here’s how.\n**1)** **Find out if your state allows you to “reinstate” the loan**\n--------------------------------------------------------------------\nIf your state has a consumer protection law allowing for it, then you may be able to reinstate your car loan simply by paying the past due amount and covering the cost to the lender for the repossession. While this will not remove the repossession from your credit reports, it will give you an opportunity to make good on the loan. In the short term, the repossession will hurt your credit considerably, but if you reinstate the loan, you’ll at least have an opportunity to bring the account into good standing _and_ keep your car.\nReinstating a loan should not to be confused with “redeeming” a car (i.e., buying it back) after it has been repossessed. You certainly may do this. And, in fact, some states require you to be notified if and when they’re selling the car so that you have an opportunity to buy it back. But in those cases, you’ll have to come up with the full price of the car, which may prove difficult if you didn’t even have the cash on hand to make your monthly payments. Just keep in mind that if you are able to redeem the car, the repossession will still remain on your credit reports.\n**2)** **Pay off any deficiency**\n---------------------------------\nIf the repossessed vehicle is resold for less than what you owe on the loan, then you are responsible for the deficiency. You do not want that unpaid balance on your credit reports, not to mention the fact that your lender can sue you for it. So negotiate a payment plan as soon possible. Just be sure that, during these negotiations, you ask the lender if – after you pay the difference – they will report the account as “Paid in full.”\n**3)** **Start building positive credit history**\n-------------------------------------------------\nOnce a repossession is on your credit reports, it’s going to be on there for up to 7 years. Unless it is a reporting error, there is nothing you can do to change that. What you can do, though, is flood your credit reports with positive credit history:\n*   Make sure you pay all of your bills on time, every single month. Late payments can stay on your credit reports for up to 7 years, too. Sure, you had late payments leading up to the repossession, but try and look at your credit as a clean slate from that point forward. You’re rebuilding from the ground up.\n*   Manage credit cards wisely. Return your balances to zero every month. And never use more than 30 percent of your available credit at a time. For instance, if you have a credit card with a $1,000 credit limit, and it has a $300 balance, you don’t want to use that card again until you pay it off by your due date.\n*   If you don’t have a credit card, get one. No matter how badly a repossession hurts your credit, you should still be able to qualify for a secured credit card. You’ll just have to pay a deposit that is typically equal to the credit limit. The key to being approved is making sure you apply for a credit card for which your credit score qualifies you. So if you don’t know your credit score, find out.\n*   Start chipping away at big credit card debt. If it’s so high that you cannot possibly return the balance to zero every month then it’s time to (a) stop using the card (if you haven’t already) and (b) start paying it off.\n*   Look for errors on your credit reports. You just might find that something inaccurate is dragging down your credit scores unnecessarily. And that’s the last thing you need when you’re already dealing with a repossession. Learn how to dispute errors with the credit bureaus, as well as other techniques to be used when repairing credit, like debt validation and debt settlement.\nAs much damage as a car repossession can do to your credit score, you can and will recover from it. Yes, you’re going to have to absorb a big hit for a while. But you’re best-served looking at this as an opportunity to take stock of the way you’re managing your credit and your overall financial life. END