Does A Reposesssion Effect My Credit Rating?
New Jersey Consumer Lawyer and Repossession
One of the most troublesome aspects of repossession is a consumers’ credit rating. Under the Fair Credit Reporting Act and all applicable industry standards, a finance company is obligated to report information to the credit reporting bureaus if they in fact report information. This means that if a finance company has not received payments, has received late payments or repossessed the vehicle, they are required to report this information accurately and completely to the credit reporting agencies, whether it is Experian, Trans Union or Equifax. Thus, a repossession or late payments seriously affect one’s credit rating and seriously affect the ability of an individual to obtain a loan or obtain a lower interest rate. This is why if a consumer has a dispute with the finance company, it is better to pay the difference and sue the finance company rather than be late on a payment from either repossession or otherwise get into a dispute which ultimately will be reported on the consumers’ credit report. It is much easier to keep this information off the credit report and sue the finance company than attempt to remove it from their credit report after it has worked its way through the system.
Most major lenders the repossessed vehicles have reporting agreements with Credit Reporting Agencies. This is a highly regulated field under the Fair Credit Reporting Act. These financing sources or financing companies or lenders must comply with the law which includes reporting accurate information. If accurate information is that a car is repossessed and/or charged off and/or the lender is in default this information gets reported to the Credit Reporting Agencies. If it is truthful, it gets reported.
This is the reason that falling behind on payments on the vehicle can be very damaging and this is why having a vehicle repossessed can be very damaging. The information gets reported and it becomes more difficult to get another car after your vehicle has been repossessed. What happens is as follows: somebody buys a car and breaks down quickly. They cannot drive it and then returned to the lender. They have to buy another car because the car they bought does not work. However, getting another vehicle after the first car is repossessed and there is a deficiency in payments, becomes very difficult. It is a downward spiral. Not paying on the car makes it harder to get another car. Having a vehicle repossessed makes it that much more difficult to purchase another vehicle. Higher interest rates are more likely and later default or subsequent default is also more likely. When this is combined of a defective vehicle because it is a low price vehicle because it was the only thing that was affordable, it's very problematic.
The best advice is do not fall behind on your payments, work out any issues with the lenders, and/or work out any issues with the selling dealer. If the vehicle is defective you need to make a claim against the lender/seller of the vehicle. Under certain circumstances the lender could be responsible for damages but they would be limited.
It is imperative that you do not let your credit get destroyed or affected by not making payments and/or having a vehicle repossessed.