Is it possible to remove repossession from your credit report? A fully inclusive guide on how long a repossession will stay on your credit report for.
It’s a well known fact that bad credit – and the consequences that unfortunately come with it – are likely to follow you around for some time after they’ve happened. It goes without saying that it’s something mortgage lenders don’t like to deal with at all, and it can have a direct impact on you applying for future loans and mortgages.
However, one thing many of us are not altogether clear on, is how long a repossession will actually stay on your credit report, here in the UK.
If you want to find out about this in more detail, read on below.
I’ve Had my Home Repossessed. How Long will This Stay on my Credit Report For?
If you’ve had your property repossessed, either recently or in the past, you’re probably going to be left wondering how long this is likely to stay on and impact your credit report.
Generally speaking, the repossession of your home will stay on your credit report for six years. In these six years, it’s likely that you’ll struggle in trying to apply for and obtain credit.
If you do manage to obtain some credit, usually the terms of it will be less than ideal. Basically this translates to: if you manage to obtain some credit within these six years, you’ll have to pay an interest rate that’s a lot higher than usual. Why? Because you’re considered as more of a risk.
Banks, mortgage companies and other lending institutions make their lending decisions based entirely on how much of a risk you represent as in terms of failure to pay on a loan.
Basically, the worse that your credit score is, the higher a risk you of in terms of failure to pay. This makes it less likely for banks and lenders to lend to you, and if they do, it’s likely to be on a high level of interest.
How Will Having my Home Repossessed Have an Impact on my Credit Rating?
It’s fairly common knowledge that having your property repossessed will, of course, have a negative impact on your overall credit rating. The big question we’re asking today though, is how?
Of course, it’s distressing enough to lose your home, but unfortunately your credit rating will be negatively impacted also.
Unfortunately, the affects that come from being repossessed will follow and stay with you for some time. There will be parts that affect you both short and long term.
An example would be that having a poor credit score will affect whether or not you’ll be accepted on a mortgage in the future. Not only this, but it will also have an impact on you becoming a tenant and renting a property, also. The vast majority of landlords nowadays will actively seek out the credit scores of their potential tenants, and if their credit report is bad, then this will negatively impact the chances of them being taken on as a tenant. This makes finding a living situation difficult.
With this in mind, our advice would always be that prevention is the best solution. Avoid being repossessed in every way possible.
How Long is Repossession Likely to Stay on my Credit Report For?
As you can see above, repossession and its’ impact on your credit score will have a direct affect on both applying for loans and future mortgages as well as being a tenant. But how long will this follow you around for? It surely can’t last forever!
As a minimum in the UK, a repossession is likely to stay on your credit report for up to seven years. These seven years will run from the date of the very first missed mortgage payment which led to repossession actually taking place.
While the repossession stays on your credit report, it’s likely you will struggle to be approved for any credit. This may also include things such as opening a bank account and obtaining insurance also.
You should try your upmost best to repair your credit file by maintaining a good credit history. This will help you to rebuild your positive credit score.
Consequently, it might be the case that you are able to be approved for another mortgage, three or four years after the repossession taking place.
However, remember that after three or four years, the repossession will still show up on your credit report. This means that the credit you’re likely to obtain will be on less than desirable terms and prices. This will include getting another mortgage.
This translates to; you’ll either not be able to borrow as much as you’d like to, or the interest rates at which you can borrow will be a lot higher than usual.
Lenders and landlords alike will assess a client or tenant on how high of a risk they pose of not repaying their loan, or paying their rent.
Any form of negative credit – including repossession, County Court Judgements, arrears, missed payments and bankruptcy – will make you less likely to be able to either borrow money, or to become a tenant.
How Can I Build Up my Credit Score?
If you have found yourself in a situation where your credit report is negative, then you’re probably going to be left asking, how can I build up my credit score?
Although it does take up to seven years for your repossession to be removed from your credit report, in the meantime there are some pro – active steps you can take in building up your credit score.
Read on to find out what you can pro – actively do to build up your credit report more quickly.
Stay Up to Date with All Payments
This might sound like an obvious point, but it’s important that you keep up with all of your payments on credit cards and so on. You should also be sure to pay all of your utility bills on time.
This is crucial when building up your credit score.
Reduce the Sum of the Debt You Have
If you are able to, reducing the sum of the debt you currently had is a great way of helping to build your credit score. Paying your debts – and on time at that – is integral.
If you are able to, it’s no bad idea to pay more than the minimum you owe on monthly payments. This helps to build up reliability as well as your physical credit score.
Set a Budget – and Stick to It!
If you’re in debt and trying to recover your credit score, then setting a budget for living is a good idea. But it won’t work unless you commit to it.
Setting a budget of what you can spend on a weekly or monthly basis will help you to manage your money a lot better.
This will aid you in your aim to keep on top of – and pay extra – on your debts, day to day living costs and bills.
There are some free apps and online templates available that can help you to create and organise your budget.
Stop the Repossession in its’ Tracks BEFORE it Takes Place
Last of all, but by no means least, remember that, without doubt, prevention is the best solution.
We know this is probably irritating to hear if the process is already too far gone – and for those who are in a situation where it is, we’ve given our best advice above – but if you are fortunate enough to be in the early stages of repossession, then halting it before it occurs is the best way forwards.
This will stop you having any sort of long term bad credit affects in the first place, and after all, isn’t that the issue here?
If you are already behind on some mortgage payments, then remember that all hope is not lost. Although it will still have an impact on your credit score, it won’t be nearly as detrimental as having a repossession on there would be.
At this stage, you may be able to speak with your lender and come to an agreement. This could be lengthening the term of your mortgage, taking a temporary mortgage holiday, and so on.
In some cases, a quick sale might be the only solution to preventing repossession taking place. Contact us for fully inclusive advice on how best to do this, and what sort of companies may be able to help you. It’s likely in a quick sale that you’ll get below the mortgage value for your property, but on the up side your credit score will remain unscathed – unless you’ve already missed mortgage payments.
Thanks for reading! We hope that we’ve been able to shed some light on how long repossession is likely to affect your credit score for, and the steps you can take to either help the situation, or prevent it happening altogether.