How badly does a car repo affect your credit?
Will a car repo badly affect my credit score? My car is going to be repossessed and I'm really scared about my credit score.
A car repossession will always hurt your credit—along with other elements of the repo process. But take a deep breath. The damage isn’t necessarily irreversible or permanent!
Repossession and the related consequences will usually stay on your credit for about seven years from the day the loan went into default. It’s hard to say exactly how much your score will drop since it depends on your specific situation. But it’s likely the drop will be substantial.
Here are a few parts of the repossession process that will likely impact your credit:
- Late payments: There will be a negative item on your credit report for every month that you miss a payment.
- Collections: If you’re upside down on your loan or simply can’t make the payments, your account could be sent to collections.
- Defaults: Your credit will take a hit if your loan goes into default.
- Court judgments: Any unsuccessful collections on your record may lead to a decision in court.
I know this all might sound scary, but try not to worry. You can recover from a repossession. As time goes on, the impact will lessen. Plus, you can always take steps to save money and build up your credit.
For starters, cut back on car insurance costs with Jerry. A licensed broker, the Jerry app will help you find and compare quotes from over 50 top insurance companies for free. With Jerry, users save an average of nearly $900 a year on car insurance!
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