If a series of mishaps leaves you strapped for cash, you might find yourself in the unenviable position of having to explain to your landlord that you cannot afford your rent. Your rental history may appear on your credit report, although details about missed payments are only likely to show up if your landlord takes legal action against you. However, credit agencies do gather some rental payment information, so a past due bill could come back to haunt you.
For a long time, credit agencies did not include rental payment history on credit reports at all. That's because rental agreements are classified as service agreements rather than debts. Experian, one of the three national credit bureaus decided to change all that in 2011 since positive payments of any kind could help a consumer build up his credit score. As of 2012, the company only recorded positive payments and did not list the details of missed payments. Therefore, you will not see a missed or late rental payment listed on your report as you would if you missed a mortgage payment. As of 2012, TransUnion and Equifax have not added rental histories to credit reports.
Equifax and TransUnion don't totallty ignore rental history. Both have a separate consumer data file just for rental histories. Landlords can pay a fee to report information about your payment history to these agencies. Records stay on file for up to seven years and prospective landlords can obtain these reports. Therefore, a missed rent payment may not hurt your actual credit score, but the credit agencies may alert other landlords to the incident.
In a worst case scenario, your landlord can take you to court over your violation of the lease agreement. The judge may order you to pay what you owe plus court costs. That kind of extreme case will raise a red flag for a credit bureau. Details of court cases and judgments are retained in publicly accessible court files, and the credit bureaus regularly review these files for information pertaining to its consumers. If they see a judgment of any type against you, rent or otherwise, it will be reflected in your credit score.
If you find yourself in a pinch, you may have to choose between paying your rent and other bills such as your credit cards, car payment and students loans. Your landlord can start proceedings to evict you, but until he takes you to court, the missed rent payment will not impact your credit. Even then, it could take months or years for the court case to reach fruition and for the judgment to appear on your report. On the other hand, if you ignore those other bills and you will see your credit score suffer within a matter of weeks. That low credit score could cause an uptick in everything from your insurance premiums to your credit card interest rates. Of course, you'll need to pay the rent eventually; but the bills should come first in regards to your credit.
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