Will Not Paying Rent Affect a Credit Score?
Rent can bite off a large portion of a tenant's monthly budget. If you're in a bind or have lost your job, it may be difficult for you to make your rent payment. If you default on your rent, go delinquent or otherwise skip a payment or make a partial amount that is not authorized by the landlord, this information can be submitted to either a collection agency or credit reporting agency with negative consequences that may affect your ability to get credit or another rental in the future.
Late Payments Can Hurt Your Credit Score
Rent that is paid late or skipped entirely, like any debt, can and usually will be reported as "Late" on your credit report. All three major credit scoring agencies -- Experian, TransUnion and Equifax -- can factor missed rent into the formula that determines your credit score. According to Experian, negative rent payment history, including evictions and civil judgments for unpaid rent, will appear in your credit report. A poor credit score can affect not only your future borrowing power, but your ability to rent a home or apartment if your credit score is too low.
How Late is Late?
According to most credit reporting and collection agencies, you must be at least 30 days delinquent in your rent to be reported to credit bureaus. The longer you go without paying your rent, and the more accounts that are late, the harder your score will be dinged. Poor credit scores can remain on your credit report for years, but the damage can be repaired when you rebuild your financial integrity with prompt payments and careful monitoring of your credit use.
Screening Tools
Most landlord and apartment complexes use consumer reporting agencies and background checks to screen prospective tenants. It can spell financial ruin for a landlord who unwittingly rents to a tenant who doesn't have the ability to pay rent and -- worse -- doesn't feel like leaving. Residential screening is permitted under federal, state and local laws. You must give your consent to residential screening at the time you fill out the rental application. According to consumer reporting agency SafeRent, the information received about you in your background check or credit score may be used in determining your ability to rent.
Blacklisting
Even if you pay your rent on time, you may be subject to blacklisting which can limit your rental choices or prevent you from renting altogether. According to the Apartment Ratings website, there are several tenant blacklist firms that share information about tenants who have damaged properties, been evicted for defaulting on the rent or have even complained too much. Like your credit report, leasing agents and landlords use this screening service as a way to reject prospective tenants. It may not be legal, and you may file a dispute to correct inaccuracies of any eviction file maintained on you.
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