How to Rebuild Credit after a Car Repossession

Going through a car repossession can be a devastating experience. Having your car taken away can be embarrassing and disheartening. Your means of transportation is suddenly gone. Now your money problems have gotten even worse because you cannot get to work. While a car repossession can be painful, you can recover from it. Building your credit back up might be the hardest part, but it can be done. Here are a few tips to help you rebuild your credit after a car repossession.

Buy Here Pay Here

After your car is repossessed, you will not be able to buy a car from a regular car lot. However, one option that you may have is purchasing from a "buy here pay here" lot. These lots allow you to finance the purchase of your car in house. They may not check your credit and they can help you get back out on the road. You will most likely have to make a weekly payment in order to keep this program in good standing. However, it will get you a car and help you get your credit going back in the right direction. Many of these lots will report this to the credit bureaus and help you get some positive momentum going forward.

Secured Credit Card

After you have a car repossession, you might not be able to get approved for a regular credit card. A typical credit card is set up as an unsecured revolving credit line. This means that there is no tangible asset associated with the money that you are borrowing. Therefore, the credit card company is taking a lot of risk by giving you a card. If you default on the card, they get nothing. After you have already defaulted on your auto loan, the credit card issuers will be leery of giving you another account. 

One way to get around this is to go after a secured credit card. This is a card that is secured with some type of tangible asset. You might be able to use another automobile as collateral or even real estate. Regardless of what you use, you need to secure the card with something. This will allow you to get approved and will help you rebuild your credit. 

Consistent Payments

Making consistent payments on time is one of the biggest things that you can do to rebuild your credit. You will do more good this way than by anything else that you can do. In the calculation of a credit score, as much as 35% of the score is made up by your payment history.

If you make all of your payments on time for an extended period of time, this will go a long way towards rebuilding your credit. You will be able to get back on a regular schedule with your payments and before you know it, your credit will be good enough to buy a car through regular means again. 

 


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