How to Get a Broken Lease Off Your Credit Report

A “broken lease” on a credit report refers to when a tenant terminates a rental agreement before its specified end date, resulting in unpaid financial obligations like early termination fees, outstanding rent, or charges for damages. Such an entry significantly impacts credit scores, hindering future housing, loans, or employment. This article guides readers through understanding, addressing, and potentially removing these negative entries.

Understanding the Credit Impact of a Broken Lease

A broken lease affects a credit report when a landlord or property management company reports unpaid debts to a collection agency. While landlords usually do not report rent payments directly to credit bureaus, unpaid balances, fees, or judgments from a broken lease can be sent to collections. Once a collection agency becomes involved, this debt is likely to appear on your credit report.

These entries show up as collection accounts or, in more severe cases, as public records if a court judgment is issued against the tenant. A broken lease resulting in an unpaid debt can remain on a credit report for up to seven years from the original delinquency date. This negative mark lowers credit scores, hindering new property rentals, favorable loan terms, or job background checks.

Gathering Necessary Information

Before taking any action to address a broken lease entry, gather all relevant information. Begin by obtaining your credit reports from all three credit bureaus: Equifax, Experian, and TransUnion. You can access these reports for free weekly through AnnualCreditReport.com. Reviewing all three reports is advisable, as information may vary.

Once you have your credit reports, carefully examine the broken lease entry. Note details like the creditor’s name, account number, balance owed, and dates of activity. Concurrently, collect all supporting documentation related to your lease. This includes the original lease, notices from the landlord or collection agency, proof of payments, and communication records (emails, letters). Also collect any move-out inspection reports or similar documents that support your position.

Strategies for Removal or Mitigation

With this information, you can pursue strategies to address a broken lease entry on your credit report. One approach is disputing inaccurate information directly with credit bureaus. You can initiate a dispute online, by mail, or by phone through each bureau’s dedicated process. When disputing, clearly state the inaccuracy, provide the account number, and include copies of all supporting documents that prove your claim.

Under the Fair Credit Reporting Act (FCRA), credit bureaus are obligated to investigate disputes within 30 days and must remove information that cannot be verified. If the initial dispute does not yield the desired outcome, you have the right to add a brief statement to your credit file explaining the situation. This statement will be included with future credit reports.

Another strategy involves negotiating with the landlord or collection agency if the debt is valid but you want to mitigate its credit impact. You can propose a “pay for delete” agreement, where the agency agrees to remove the collection account from your credit report in exchange for payment. Not all agencies agree to this, and its effectiveness varies, but it is a negotiation point. If an agreement is reached, ensure all terms, including the deletion of the entry, are documented in writing before making any payment.

If negotiation for removal is unsuccessful, paying the debt in full is another option. While paying a collection account does not remove it from your credit report, it updates the status to “paid” or “satisfied.” A paid collection account is viewed more favorably by lenders and scoring models than an unpaid one, though the negative mark can remain for seven years. After payment, obtain proof of payment and a zero-balance letter from the collection agency for your records.

Long-Term Credit Management

After addressing a broken lease entry, focus on long-term credit management to rebuild and maintain a positive financial profile. Regularly monitoring your credit reports from all three bureaus is a foundational step. This practice allows you to track the progress of any removed or updated entries and quickly identify new inaccuracies.

Building a positive credit history improves your credit score over time. Consistently making all payments on time across all your accounts, including credit cards and loans, contributes to a strong payment history, a major factor in credit scoring. Maintaining low credit utilization, keeping credit card balances low, also supports a healthy credit score. Over time, the impact of older negative entries, like a broken lease, diminishes, and they will eventually fall off your report.