Writing a Sample Letter to Remove Repossession From Credit Report

Lenders will repossess vehicles from consumers who fall behind on their car payments. The associated negative entry will remain on your credit report for up to seven years. 

But in response to a formal written request, lenders might remove the derogatory entry from your credit report as a goodwill gesture.

Can a Lender Remove a Repossession From Your Credit Report?

Car loans are a type of secured loan that uses the vehicle as collateral. The lender retains the vehicle’s title throughout the loan repayment term. If a borrower defaults on the loan, the lender may repossess the vehicle.

Repossessions and similar negative events remain on your credit report for seven years. Other examples include late credit card payments or home foreclosures. 

During the seven-year period, the negative entry will have an adverse impact on your credit score. Credit bureaus and lenders have an obligation to truthfully report all credit activity.

Consumers who notice credit report entries that contain errors may file a dispute. Here, lenders have an obligation to review and either correct or remove any erroneous information.

Lenders have no obligation to consider requests for the removal of valid, derogatory credit report entries. Yet, debtors may consider creating a skillful goodwill letter requesting removal.

Although unlikely, some requests are successful in persuading lenders to help. Negotiating for removal by agreeing to pay any balance owed is often the most effective strategy.

Credit repair companies today promote services to consumers that use these and other tactics or strategies. Always research any credit repair companies thoroughly before using their services.

How Do I Get a Repossession Removed From My Credit Report?

Borrowers can try writing a goodwill letter requesting that a lender remove a repossession from their credit report. The letter is a politely written request that acknowledges failing to pay the obligation.

In some cases, borrowers experienced an unforeseen event that created hardship. Examples might include an illness, loss of employment, or divorce.

Here, the letter would explain the details using a courteous tone that could generate empathy. Consider including supporting documentation if appropriate.

Have you more recently demonstrated improvement in the responsible use of credit? Consider creating a sense of optimism by emphasizing your progress since the repossession.

Goodwill letters have a higher likelihood of success in scenarios such as having a single late payment. A repossession is typically a situation that progresses much further. Thus, a “pay-for-delete” approach might be more suitable.

A pay-for-delete strategy involves proposing to pay off the balance (or some portion of it). Debt collection agencies are often more receptive to such arrangements than original lenders.

Third-party collection agencies may get accounts from the original lenders for only a small fraction of the balances owed. Keep in mind that any negotiations that involve making a payment must always be documented in writing.

Sample Letter To Remove Repossession

The following is an example of a goodwill request letter involving a vehicle repossession.

John A. Johnson
111 Main St. # 2A
New York, NY 10024

March 1, 2023

XYC Collections Inc.
3050 W. Johnson Blvd.
Philadelphia, PA 19101

RE: Credit Account # 20004455

To Whom It May Concern:

I am writing about my vehicle repossession that occurred in September of 2021 with ABC Motor Credit. An adverse entry exists within my credit report with all three major credit bureaus.

In 2020, I endured a sudden loss of employment that started a series of personal financial problems. This abrupt departure from my employer was involuntary and resulted from the COVID-19 pandemic.

Before this period of financial strife, I had made all my car payments for 24 months on time without issue. 

Since gaining employment 10 months ago, I have made some personal improvements and changes. These efforts should prevent similar adverse financial situations in the future.

In recent months, my poor credit has created a host of challenges. For example, I have struggled to obtain lease approval for an apartment and have more limited credit options.

I respectfully ask that you consider making a goodwill gesture that removes the repossession from my credit history report. 

Thank you for your consideration,

John A. Johnson

Bottom Line

Rebuilding poor credit following a repossession or similar negative event is not easy.  

Consumers should consider a multi-faceted approach to rebuilding credit. Goodwill letters are merely one tool available.

Paying all bills on time is the single, most-critical factor. Consider pay-for-delete strategies and other credit-building options. Examples include obtaining a secured credit card or getting a credit-builder loan.

Also, get current copies of your credit report. Consumers are eligible for a free copy of their report each year. Familiarize yourself with how to read your credit report and check closely for any errors.

Keep in mind the importance of saving money for emergencies and creating a written budget. Limit unnecessary credit card spending. Use tools such as automatic monthly payments and others that help prevent any future late payments.

Also Read:

• How Soon Can I Get My Repossessed Car Back?
• My Car Was Repossessed. What Happens Next?
• How To Fix Credit After a Car Repossession
• How Long Does a Repo Stay on Your Credit?