Can a Landlord Ruin Your Credit? Here’s How It Happens

Landlords can impact a tenant’s credit score through specific actions and reporting mechanisms. This article details how rental activities influence credit, how information is reported, and steps to protect your credit profile.

How Landlords Impact Credit Reports

Landlords influence a tenant’s credit report primarily when financial obligations are not met. Collection agencies are the most common method, receiving delinquent accounts like unpaid rent or damages. These agencies report outstanding debt to major credit bureaus, leading to a negative mark on the tenant’s credit file. This entry can significantly lower a credit score.

Court judgments also play a role. Legal actions like eviction or money judgments for unpaid rent or property damage become public records. While eviction filings might not appear directly on a credit report, associated financial judgments can be picked up by credit bureaus or tenant screening services. These public records can remain visible for up to seven years, affecting future housing and credit opportunities.

Tenant screening services compile rental histories, including eviction records and credit information, which future landlords use for applicant evaluation. Some services may transmit data to credit bureaus. Some large property management companies or specialized rent reporting services can report payment history directly to credit bureaus. Negative reporting through this direct channel is less frequent than through collection agency involvement.

Specific Actions That Damage Credit

Tenant actions or inactions can directly lead to negative credit report entries. Consistent late payments or non-payment of rent are primary causes. If rent remains unpaid for 30 days or more, a landlord may send it to collections. This unpaid debt, when sent to a collection agency, will appear as a derogatory mark on a credit report and can remain there for up to seven years. Payment history constitutes a significant portion of a credit score, so such delinquencies can substantially reduce it.

Evictions often result in financial consequences that impact credit. An eviction filing may show up on tenant screening reports, and an eviction judgment for money owed can lead to a collection account or a public record entry on a credit report. Debt associated with an eviction, if sent to collections, will negatively impact credit.

Breach of lease agreements can also create financial liabilities that harm credit. If a tenant breaks a lease early, they may incur financial obligations such as remaining rent or re-rental fees. If these debts are not paid and are sent to collections, they can appear on the credit report. Unpaid utilities or other fees stipulated in the lease, like late fees or cleaning charges, can lead to collection agency involvement if not settled, resulting in negative credit reporting.

Safeguarding Your Credit

Tenants can prevent negative rental history from impacting their credit by consistently paying rent on time. Paying rent before or on the due date helps avoid situations that could lead to collection actions.

Maintain records of all financial transactions and communications with the landlord, including rent payment receipts, bank statements, and correspondence. Documenting the property’s condition with photos or videos before moving in and after moving out can help prevent disputes over damages.

Understand the lease agreement. Read all terms and conditions, paying close attention to rent due dates, grace periods, late fees, maintenance responsibilities, and early termination clauses. Knowing these details helps avoid breaches that could result in financial penalties.

Communicate promptly with the landlord. If unforeseen circumstances arise, such as financial difficulties or maintenance issues, communicating in writing can help resolve problems before they escalate. Handle the security deposit process properly, including adhering to move-out procedures, to minimize disputes over damages.

Disputing Credit Report Entries

If a tenant discovers an inaccurate negative entry on their credit report, they can dispute it. Obtain a free copy of your credit report from Equifax, Experian, and TransUnion via AnnualCreditReport.com. Reviewing all three is advisable, as information may vary.

Once reports are obtained, identify inaccuracies like incorrect balances, duplicate entries, or accounts already paid. If an error is found, dispute it directly with the credit bureau(s) reporting the incorrect information. This can be done online, by mail, or over the phone. Provide an explanation of the error and include copies of supporting documentation, such as payment receipts or lease agreements.

Dispute the information directly with the data furnisher (e.g., a collection agency) that reported it to the credit bureau. Furnishers must investigate disputes and correct inaccurate information. Keep records of all dispute communications, including dates, names, and copies of all documents sent and received. Credit bureaus have 30 days to investigate and report results.