How to Fix a Credit Score After a Repossession

A repossession of property used to secure a debt is one of the most devastating things that can appear on a credit report. If lenders see that you have a record of defaulting even on secured debt, it can be extraordinarily difficult to go through the already challenging process of debt repair. The only thing that is more difficult to recover from in terms of credit score is bankruptcy.

Instructions

1

Pay or settle all existing debts as soon as possible. Outstanding debts, particularly delinquent ones, degrade your credit rating when they are not repaid.

2

Secure steady employment. If you have a record of repossession and debt delinquency, lenders will prefer to see that you have regular employment before considering you for even distressed debt.

3

Rebuild your credit history by using secured credit cards. These cards require that you pay money up front to the credit card company that can then be borrowed against. These are expensive, typically have high fees and charge high interest. If you pay off the balance on time every month, it will improve your credit rating slowly.

4

Build up assets and savings. Even if the assets are not used to secure debt, lenders will be more likely to reconsider providing loans if you can show that you have sufficient savings and assets to provide collateral for loans.

5

Avoid bankruptcy, even if it may seem to be a tempting method for settling debts rapidly. Bankruptcy makes it very difficult to repair credit. Even though it may stop further repossession and collection efforts, it has such a negative effect on credit that if continued access to loans in the next decade is important to your household, it should be avoided.