Looks like surface rust. You can scrape the paint off the rust, sand down to bare metal, prime and paint. If you don't want to spend allot you can just use touch up paint. Also try to use a primer that bonds with rust. Oh if it doesn't look good when you are done you can always put a spot lamp or sticker there to cover it up. I know it doesn't sound good but up here I know a few people that fix there cars by putting bumper stickers over rust spots.
Don't forget to
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first then ask questions later! The loose nut behind the wheel