Does an Eviction Hurt Your Credit Score?

An eviction impacts financial standing. This legal process can influence a person’s credit, and this article explores the relationship between eviction events and credit reports, detailing the financial repercussions that can arise.

The Immediate Credit Impact of Eviction

An eviction is a legal proceeding initiated by a landlord to remove a tenant from a property. The filing of an eviction case does not appear directly on a traditional credit report. However, financial obligations from an eviction can significantly harm one’s credit standing. Unpaid rent, late fees, or damages owed to a landlord can lead to negative entries on a credit report.

When a tenant fails to pay rent or other lease-related charges, the landlord may pursue these debts. If these unpaid amounts are not resolved, the landlord can turn the debt over to a third-party collection agency. This action results in a collection account being reported to the major credit bureaus, which can cause a substantial drop in credit scores. Such collection accounts signal a higher financial risk to potential lenders and creditors.

How Eviction-Related Information Appears on Credit Reports

The financial fallout from an eviction can manifest in specific ways. One common way is through collection accounts. If a landlord refers unpaid rent or damages to a collection agency, this debt is reported to consumer credit bureaus, such as Equifax, Experian, and TransUnion. These collection accounts remain on a credit report for about seven years from the date of the original delinquency.

Civil judgments, which might arise if a landlord sued a tenant for unpaid rent and won, no longer appear on credit reports as public records. The three major credit bureaus stopped including most civil judgments on credit reports. While these judgments are still public records and can be discovered through background checks, they do not directly impact a consumer’s credit score. However, specialized tenant screening reports may still show eviction records, regardless of whether they appear on a traditional credit report. These reports provide landlords with a detailed rental history, including past evictions, making securing future housing more challenging.

Managing Your Credit After an Eviction

After an eviction, proactive steps can help manage and rebuild your credit. Begin by regularly obtaining and reviewing your credit reports from all three major bureaus. You are legally entitled to a free copy of your credit report from each bureau annually through AnnualCreditReport.com. Checking these reports allows you to identify inaccuracies, such as incorrect debt amounts or invalid collection entries.

If you find errors, dispute them directly with the credit bureau reporting the inaccurate information. Provide clear documentation to support your claim, and the bureau is required to investigate the dispute within a reasonable timeframe. Beyond correcting errors, focus on establishing positive payment habits to rebuild your credit history. Making all other payments on time, such as credit card bills and loan installments, is a significant factor in credit scoring.

Keeping credit utilization low, below 30% of your available credit, contributes to your credit score. For those looking to re-establish credit, secured credit cards or credit-builder loans are effective tools. These products help demonstrate responsible financial behavior to credit bureaus, aiding in recovery.