A vehicle repossession can be a serious blow to your credit score, but it doesn’t mean it's beyond repair. While a repossession remains on your credit report for up to seven years, you can lessen its impact by taking proactive steps to rebuild your credit.

If you’re committed to making that effort, here’s how to fix credit after repossession:

Step 1: Dispute any errors on your credit reports

The first step in fixing your credit is carefully reviewing your credit reports for accuracy. You can obtain free copies from Experian, Equifax, and TransUnion at AnnualCreditReport.com.

As you examine your reports, check for common errors, such as incorrect personal information, including misspelled names, outdated addresses, or inaccurate Social Security numbers. Look for duplicate or outdated negative accounts that should have been removed, as well as incorrect balances or late payment records — especially those related to the repossession.

If you find any inaccuracies, you should dispute them with each credit bureau.

Step 2: Pay off any remaining debt

Repossession doesn’t always erase your debt. If the lender sold your car for less than what you owed, you might still be liable for the remaining balance, known as a deficiency balance.

To address this:

• Contact the lender and negotiate a settlement or payment plan
• Consider a debt consolidation loan if you have multiple outstanding debts
• Work with a credit counselor to explore options for managing your debt

Step 3: Make on-time payments a priority

Because your payment history accounts for 35% of your credit score, it's a major factor in credit rebuilding. A repossession may have lowered your score, but consistent on-time payments can help you recover.

Best practices for making on-time payments:

• Set up automatic payments for bills, credit cards, and loans

• Use calendar reminders for due dates

• Pay at least the minimum balance on all accounts to avoid late fees and further negative marks

Step 4: Lower your credit utilization

Credit utilization is the amount of credit you’re using out of your total available credit. It makes up 30% of your score, so keeping your balances low can significantly boost your credit rating.

To reduce your credit utilization:

• Keep balances below 30% of your credit limit (under 15% is better)
• Make extra payments on credit card balances when possible
• Request a credit limit increase, but avoid accumulating new debt

Step 5: Rebuild credit with the right tools

After a repossession, you’ll need to establish new positive credit to strengthen your credit. Consider these options:

Apply for a secured credit card

• Requires a cash deposit as collateral

• Helps rebuild credit with responsible use and on-time payments

• Reports activity to all three credit bureaus

Consider a credit-builder loan

• You make a series of monthly payments

• At the end of the loan, you receive the money, plus a credit score boost

• Available through credit unions and online lenders

Become an authorized user

• Ask a friend or family member to add you to their credit card

• Their positive payment history should improve your credit

Report rent & utility payments

• Some services report rent, utility bills, and phone payments to credit bureaus. You can usually find them within your existing payment portals.

Step 6: Avoid common mistakes

Many people unknowingly slow their credit recovery by making avoidable mistakes. Outside of what’s above, you’ll want to refrain from closing old accounts or applying for too much new credit. Even if unused, older accounts can have a positive effect by showing a credit history. However, having too many applications for new credit lines can lower your score.

So, how long does it take to rebuild credit after a repossession?

While individual credit recovery timelines vary, here’s an estimate:

• Within 12-18 months: You’ll begin to see gradual score increases if positive financial habits are maintained

• Within two to three years: Your credit score can rise to "fair" (580-669) or "good" (670-739)

• Within 5+ years: You may achieve a 700+ credit score, even with a past repossession

Moving forward after your repossession

It’s indeed possible to restore your creditworthiness and improve your financial stability. Responsible behavior shows lenders that you’re regaining control of your finances, helping to improve your credit score over time.

If you're looking to finance a car while rebuilding your credit, Credit Acceptance works with over 15,000 dealerships coast-to-coast to help credit-challenged buyers obtain a vehicle. You can start the pre-qualification process online should you need a car now.