So it finally happened—the perfect financial storm. Maybe you had a car accident, medical bills, or lost your job and you couldn’t pay rent. Remember that communication is key; you may be able to negotiate with your landlord about a slightly late payment. In addition to a late fee, they can report payments as late as 30 days past due to a credit agency, which can negatively impact your score.
If you live in an upscale apartment and have a good relationship with the agency, you can talk to them about repayment plans.
How Big is the Impact on my Score?
First and foremost, you will only see a hit on your score if your landlord reports a delinquency to one or more credit bureaus. Once that happens, your credit can take a huge hit, but it depends on a few factors. First, the bigger your score is, the harder it can fall. For example, a score of around 750 can drop 90-100 points. Those credit dings can remain for as long as 7 years after the initial report.
Again, communication is key here. If you have a good relationship with your landlord and a history of on-time payments, call and explain your situation. Even if they aren’t in the business of charity, it is in their best interest to avoid a hassle and keep you on as a paying tenant. Offer a partial payment and let them know when a full payment can be expected—and don’t make another late payment, or they may not be as understanding.
Tenant Screening Agencies
Even if the delinquency isn’t reported to a credit bureau, be aware that your landlord may still report it to a tenant screening service. This can cause problems with future rentals when a prospective landlord checks a report and discovers you’ve had a delinquent payment. Luckily, though, this report alone won’t affect your score.
Missing a Payment Due to Landlord Negligence
There are some instances where you would purposely withhold rent. For instance, your home is not habitable due to extreme mold or negligent repairs, and despite many efforts on your part, your landlord hasn’t taken action. If this is the situation, make sure to document the problem with photos, document any conversations with your landlord, and visit a lawyer to see if you can use this defense in your jurisdiction. If the landlord reports this withholding to a credit agency, you will have documentation that will help them reverse it.