Let’s examine three strategies for removing this scar on your credit history so you can get back on track financially.
1. Negotiate New Payments
Your first step is to negotiate with your original lender. This could be an online lender, a bank, or an in-house finance company at the dealership. You may wonder how you can negotiate a deal after your lender has already repossessed your asset–the fact you owe money means you have leverage. If you can speak to a person with authority to make policy decisions, you can negotiate a deal, including paying off your balance in exchange for clearing the negative mark from your credit report.
If you reach a deal, be sure to get all the details in writing before making any payment. Apart from having the cash, the most daunting part about this approach is speaking to the right person–you’ll need some patience and persistence.
2. Dispute the Repossession
You can clear a negative item from your credit report by disputing the repossession with the major credit bureaus in the U.S., which are Experian, Equifax, and TransUnion. Data from these bureaus influence your FICO score, which credit lenders consider before giving you a loan.
To dispute a repossession from your credit report, you must look over the entry carefully, searching for any discrepancies you can find. For accuracy, check all the dates, payment terms, account numbers, balances, and other details. If you find a discrepancy, dispute the item with the credit bureau responsible for inaccurate data–the bureau has thirty days to confirm that its data is accurate. If the information is incorrect, the bureau must remove the entry or correct the data per the Fair Credit Reporting Act.
Often, all the major credit bureaus will have the same discrepancy because they receive data from your lender. So, send dispute letters to credit bureaus, including your name, account numbers, address, and social security number. If you’re wondering how long a credit dispute takes, it’s usually around a thirty- to sixty-day process.
3. Seek Professional Help
Suppose you don’t want to worry about calling your original lender and waiting on hold for ages to find the right person, writing letters, or coming up with the money to settle your repossession. In that case, you can hire a reputable credit repair company to help.
Credit repair companies do this type of work regularly and have the experience and expertise beyond common knowledge. A reputable credit repair company near you can get the job done if it’s possible to clear a repossession from your credit report.
Although you have to pay a fee for this type of service, clearing the repossession from your credit report is worth it, as it leads to lower interest rates and the freedom of not needing a co-signer anytime you need to get a loan.
Final Thoughts
Maintaining a good credit score is vital because a bad credit score can affect all of your requests for credit, and a bad credit score can have a long-term effect on your life. A repossession can scar your credit history, lowering your credit score by more than one hundred points. That combined with negative payment history leading up to the repossession may bring higher interest rates and lower chances of securing future loans.
Professional credit repair services, like those at The Phenix Group, can help you clean up your credit report and take the legwork out of the process by negotiating for new payments, disputing the repossession with credit bureaus on your behalf, and providing professional advice to keep your credit health in check.