Question

Will car repossession hurt your credit score?

Car repossession can affect your credit score and it can be a looming threat for those who have taken an auto loan.

A car can get repossessed as soon as you default on your loan. That is, if you miss a payment or two, the lender can take back the car or repossess it. And this can hurt your credit score as missing a payment is a negative mark on your credit report. Not only will a repossession be recorded in your credit history, but it can stay on it for up to 7 years. It can also cause a drop in your credit score. It you are someone who already has a not-so-decent credit score to begin with, losing 100-200 points can be awful.

Not only default payments but frequent late payments can also ruin your credit history. Moreover, defaulting on your payments can lead to the lender taking legal action against you to repay the loan, which can significantly dent your credit score even more. A lower credit score accompanied by loan defaulting can ruin any chance of taking a loan in the future as well.