When your home is repossessed, it stays on your credit report for six years. The six years starts from the date of the original missed payment. After six years, it’ll be removed from your credit record. However, you should always be honest and upfront about any previous repossessions when it comes to applying for a mortgage - even if it’s dropped off your credit file.
A repossession will negatively impact your credit rating when it happens. Your credit score will improve in time as the repossession gets further away as long as you’re careful to improve your score during this time.
If your repossessed house sells and you still owe money, your original mortgage lender could contact a debt collection agency to collect your debt, or file in court. If this happens, it’ll appear on your credit file and negatively impact your credit score.
To make sure the repossession has the least impact on your credit score that it can possibly have, you should pay back the debt as soon as you can. Once it’s marked as ‘paid’ on your credit file, lenders will see that as much more of a positive than seeing an ‘unpaid’ repossession debt.
Being faced with a house repossession can feel incredibly isolating. But you’re not alone. The last thing mortgage lenders want to do is repossess your property. They want you to be able to make your payments, so if you find yourself struggling you should speak with your lender as soon as possible to find out your options.