How long an auto repossession will affect your credit

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Credit Advice

Topics addressed on June 10, 2009:

How long an auto repossession will affect your credit

Dear Max,

I am a graduate student with no income. I have a car payment that hasn't been paid in two months, and now they want to repossess it. I am doing all I can to get the money but am considering letting them take it. I have no help at all. What should I do? How long does it take a repossession to be removed from a credit report, and how long will it be held against me?

- ANS

Dear ANS,

Obviously, it would be best to catch up on the debt and keep the car. However, a repossession might be unavoidable. It's not the end of the world, though.

The repossession will be deleted from your credit report seven years from the original delinquency date of the original auto loan.

The repossession will have a negative impact on your credit report throughout the seven year period. However, the further in the past in occurred, the less negative that impact will be.

You can also reduce the effect on your credit scores by making sure you manage your other credit obligations well. Make all of your payments on time on your other accounts and keep your balances low.

While it won't completely override it, the positive record will help offset the repossessed auto. Once it is deleted, you will be left with an entirely positive credit report once again.

I hope you are close to graduation and can find a great job soon. You will then have to focus on those student loans which you undoubtedly have. Until then, please try to live on what you can earn in a part-time job and don't take on debt that you can't pay.

Thanks for asking.

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