How Does an Eviction Affect Your Credit?

Find out more about evictions, if having an eviction can impact your credit score or prevent you from renting in the future, and tenant rights.

The post How Does an Eviction Affect Your Credit? appeared first on Credit.com.

An eviction notice is a written statement informing you the landlord believes you’re in violation of the rental agreement. Depending on why you’re being evicted, the type of notice you receive and the state you live in, you may need to vacate the property by a certain time. But if you have an eviction notice in your past, you might be worried about getting approved for a new rental situation.

Find out below what happens if you get evicted, including whether you can or should fight the notice and whether you can get a new rental. As with any situation involving your credit and money, being prepared with knowledge can often make a huge difference in the outcome.

How Does Being Evicted Affect Your Credit?

Evictions aren’t included on your credit report, and neither are certain types of public records such as eviction judgments. However, that doesn’t mean an eviction leaves your credit squeaky clean or that potential future landlords won’t know about your eviction history.

First, collection accounts or debts leading up to your eviction do appear on your credit report. If you fell behind on rent and tried to right the situation with a personal loan that you also fell behind on, for example, that could hurt your credit. And if the landlord turned uncollected rents over to a collection agency at any point, that can also negatively impact your score.

An outstanding debt (such a collections account) on your credit report can significantly impact your overall credit score. In fact, your payment history accounts for up to 35% of your credit score. So, just one missed payment, including one missed rent payment, can drop your credit score.

Second, judgments related to evictions are a matter of public record. Future landlords might not see them on your credit report, but they can easily find them by searching court records. Many landlords use tenant-screening services that provide rental backgrounds on prospective tenants, and court records related to evictions are typically included.

If you’re having trouble making your monthly rent payments, consider setting up a budget to track your spending. This step may help you avoid a potential eviction.

Does an Eviction Go on Your Credit Report?

No, landlords can’t report evictions to the credit bureaus because these agencies don’t collect this type of information. However, this doesn’t mean future landlords can’t find out about the eviction. Court judgments, including evictions, are public records. This means landlords can still find out if you have an eviction in your past.

While searching public records can be a cumbersome process, many landlords use tenant screening services to conduct background checks on potential tenants. This service makes it easier for landlords to learn about past evictions. So, even though an eviction won’t directly impact your credit, it can affect your ability to rent in the future.

Legitimate Reasons for Eviction

Specific landlord rights vary from state to state, but there are several reasons a landlord may have the right to evict you, including:

• Failure to pay rent: If you fail to pay rent within the grace period, your landlord can start the eviction process. The judge will likely give you a set number of days to make the payment. If you still fail to pay, you may be forced to leave the rental property.
• Lease violation: When you rent an apartment, you must abide by the terms of the lease. If you fail to do so, the landlord can evict you. For example, if your lease says no pets yet you have pets on the property, the landlord can break the lease and require you to move.
• Illegal activity: If you’re doing something illegal on the rental property, such as using drugs or committing domestic violence, a landlord has the right to evict you.
• Property damage: If you willfully damage the property or make renovations without the landlord’s permission, this could be grounds for eviction. It’s important to understand the terms of your lease before signing it.
• End of lease: When you sign a lease, it should cover a set term, such as 1 year or month-to-month. Unless you sign a new lease or your lease automatically extends the terms of the previous lease, you must move at the end of the term. If you have a month-to-month lease, your landlord must give you a 30-day notice to move. If you fail to move out of the property at the end of the lease or within the 30-day notice period, your landlord can take steps to evict you.

Illegitimate Reasons for Eviction

Landlords can’t evict tenants without cause. Once a lease is signed, both landlords and tenants are bound to its terms. It’s illegal for landlords to discriminate against their tenants and evict them based on their color, race, gender or national origin.

Additionally, landlords can’t evict tenants as retaliation. For example, your landlord can’t evict you because you complain about property conditions or request repairs.

Can You Dispute an Eviction?

Yes, you can dispute an eviction. A legal eviction requires a judgment from the courts. Before a judgment is rendered, there must first be a court hearing.

You have the right to attend this court hearing, hire an attorney and present your evidence to the court. It’s important to be present at this hearing because the judge can make a final decision without your input.

What Can Happen If an Eviction Is on Your Credit Report?

If you’re legally evicted from your rental, it won’t be on your credit report. However, any unpaid rent balance that you still owe your landlord can end up on your credit report. If this happens, it’s likely to impact your credit score.

It’s important to pay off this balance as quickly as possible. This step can minimize the impact on your credit score. If there’s an incorrect unpaid rent balance on your credit report, you should take steps to remove that information. You can do this by writing to the credit reporting agencies and providing evidence that the information listed on your report is wrong.

What to Do If You Receive an Eviction Notice

Eviction processes vary by state. Eforms, a site that provides sample eviction notices for landlords, summarizes the eviction process for each state. A good first step is to find out exactly what the process in your state is so you know how to respond appropriately to an eviction.

Eviction notices come in two main types: curable and incurable. Curable notices detail how the landlord thinks you broke the lease agreement and how you can fix it. If you cure the issue, the eviction is retracted. Incurable notices don’t have any fix and simply require that you vacate the premises by a certain date.

A common reason for an eviction notice is that the landlord claims the rent hasn’t been paid. In many cases, this would be a curable eviction notice. If you catch up on your rent, the landlord might not move forward with the eviction.

In many cases, if you don’t respond to the eviction notice to cure it or move out, the landlord must go to court to get a judgment against you. This allows law enforcement to require you to move out of the property.

You usually have an option to appear in court and fight the eviction. For example, if you’re withholding rent because the landlord has not fixed something that is his or her responsibility under the lease, you could use that as a defense.

A judge might rule on your side, requiring the landlord to make those repairs before you are required to catch up your rent. But keep in mind that we’re not legal experts—if you find yourself in this situation, we recommend consulting with a lawyer.

What Happens If You Get Evicted?

If you know you’re at fault or the judgment doesn’t go your way, you are likely going to have to move out of the rental property. It’s important to know how the eviction might impact your credit history and chances of getting another rental in this case.

Can You Still Rent an Apartment If You Have Been Evicted?

If you’ve been evicted from a townhouse, apartment or rental home, it may be difficult to qualify for a new rental if a potential landlord checks your rental history. If you have an eviction hampering your ability to find a place to live, you have a few options:

• Try to find a private landlord who doesn’t use screening services or check credit history
• Look into reporting any rent that you’re paying—it could help your credit score
• Try negotiating with a potential landlord by offering a large security deposit or several months of rent up front
• Find a cosigner with good credit to live with
• Live with friends who already have a home and history of good payments

Try to Make Amends

If you were evicted for unpaid rent, the best way to make amends is to reach out to your former landlord or collection agency and make up those missed payments. Doing so could make finding a new place easier, especially if you get proof in writing that you made good on the old debts.

How to Avoid Eviction in the First Place

Abiding by your rental agreement is the most important thing you can do to avoid being evicted. Your agreement is a legally binding contract, so understanding everything expected of you—from maintenance of the property to noise restrictions and timely rent payment—is critical, as is knowing the tenant laws in your state.

If you have problems, talk to your landlord as soon as possible. Things happen, but landlords often appreciate knowing you want to do the right thing, and communication is essential. Also keep in mind that finding new tenants is a hassle most landlords would rather avoid. They can often be willing to work with you, but you have to take the first step.

Keep an Eye on Your Credit

Even if you do everything you’re supposed to do, when you live in someone else’s property, keep in mind that you might have to move unexpectedly. A landlord could potentially sell their property, or you could decide that the landlord isn’t someone you want to rent from anymore, for example. Keeping an eye on your credit regularly helps you improve your score, which can help you secure a new rental property as needed.

Check out Credit.com’s Credit Report Card. It gives you the everything you need to know about all the factors that make up your credit score, so you know exactly what areas you need to work on to improve your score.

The post How Does an Eviction Affect Your Credit? appeared first on Credit.com.