What Happens to Your Credit When You Get Evicted?

What happens to your credit when you get evicted?

By Janet Berry-Johnson, CPA

When you can’t pay your rent, or you break other promises made in your lease agreement, you run the risk of being evicted. You aren’t alone. On average, 3.6 million eviction cases are filed in the United States each year. Less than half of those (1.5 million) end in actual eviction judgments.

Aside from leaving you scrambling to find a new rental unit, an eviction can seriously damage your credit score. While an eviction doesn’t directly show up on your credit report, it can still impact your credit and affect your ability to rent in the future.

Here’s what to know about evictions, their impact on your credit, and what your options are if you’re facing one.

In this article

What is an eviction?

Eviction is a legal process that allows a landlord to force their tenant to vacate the property.

Financial troubles aren’t the only reason people get evicted.

A landlord can evict you for:

  • Subletting the property to someone who isn’t listed on the lease
  • Violating a no-pets or no-smoking policy
  • Damaging the property
  • Being disruptive to other tenants

And more.

Eviction notice laws vary by state, but most states require the landlord to send an eviction notice alerting the tenant of the issue. Then the tenant has a short period of time – typically anywhere from three days to one month – to resolve it.

If the tenant can’t catch up on rent or otherwise fix the problem, the landlord files the eviction paperwork in housing court. The court then provides a hearing date to both the landlord and tenant.

Ay the eviction hearing, the landlord and tenant can present their case and provide supporting documentation, including the original lease, correspondence between the landlord and tenant, etc.

If the landlord wins the case, the tenant will receive a court order to move out. The deadline to move out varies by state but is usually anywhere from a couple of days to a few weeks.

What happens to your credit when you get evicted?

If you’ve been evicted, it won’t be listed on your credit report. However, an eviction can still impact your credit.

If you owe the property owner back rent or other fees, the landlord can turn that debt over to a collection agency. The collection agency will almost certainly report your account to the credit bureaus, which will negatively impact your credit score.

According to myFICO, having an account reported to collections has a significant negative impact on your credit score. Exactly how much of an effect it has will depend on the amount reported to collections and the other information included in your credit report.

By the time your account gets sent to a collection agency, it’s already past due. So the collection agency doesn’t have to wait a certain amount of time before reporting it to the credit bureaus.

Once there, the collection account remains on your credit report for seven years from the date of the first missed rental payment. The more recent the late payment, the greater impact it has on your credit score.

In the past, the eviction might also appear on your credit report in the form of a legal judgment. Your property owner can file a lawsuit against you for unpaid rent. If the property owner won a judgment ordering you to pay, that judgment would appear on your credit report in the Public Records section.

Thanks to the National Consumer Assistance Plan, the three major credit reporting agencies (Experian, Equifax, and TransUnion) no longer include judgments as a part of a consumer’s credit history.

The only public record information that is collected routinely by the credit reporting bureaus is bankruptcy.

If a civil judgment, such as one resulting from eviction, appears on your credit report, file a dispute with the credit reporting agency to have it removed.

How to avoid eviction

The easiest way to avoid eviction is to resolve the situation as soon as you receive the first notice from the property owner.

Of course, sometimes you simply can’t afford to pay the full amount of rent due, even though you’d like to stay where you are.

In that case, talk to your landlord about whether they will accept a payment arrangement. Some property owners are willing to work with tenants who need a little more time to pay, especially since evicting a tenant can be expensive.

Be sure you get any payment agreement in writing.

If the property owner doesn’t work with you, you might be able to get rent help from one of these resources:

Temporary rental relief due to the coronavirus pandemic

If you live in an apartment building with a federally-backed mortgage and can’t pay your rent due to COVID-19, the CARES Act created a 120-day moratorium on evictions caused by not paying rent. Your landlord cannot charge late fees or penalties during this time.

The Act does not cancel rent, so you will still owe the money eventually.

Check with your landlord or property manager to find out whether your building’s mortgage is federally insured. You can also check out the National Low Income Housing Coalition’s searchable database and map of covered properties.

The eviction moratorium started on March 27, 2020, and expired on July 24, 2020. However, there have been discussions in Congress about extending the eviction moratorium and expanding it to cover all renters.

Many states have issued their own eviction moratoriums due to COVID-19. The National Low Income Housing Coalition maintains a list of state and local bans.

Local Community Action Agencies

The U.S. Department of Health & Human Services provides Community Services Block Grants to community organizations that provide rental assistance and landlord intervention.

You can search for a Community Action Agency in your area at www.communityactionpartnership.com/find-a-cap/.

State Housing Finance Agencies

Housing finance agencies offer individuals and families a wide range of housing support and assistance. The National Council of State Housing Agencies maintains a list of housing finance agencies by state.

State Social Service Agencies

Check with your state social services agency for more information on state benefit programs that may be able to help with rent assistance and other benefits.

USA.gov allows visitors to search for social service agencies by state.

How will eviction impact finding a new place to live?

An eviction may not appear on your credit report, but that doesn’t mean potential landlords won’t find out about it.

Many landlords order tenant screening reports that provide information beyond an official credit report.

Tenant screening reports provide information on the history and habits of tenants. They may include your credit history, but they can also include details about your payment and eviction history and even a criminal background check.

Like credit reports, negative information, including evictions, remains on your tenant screening report for seven years.

The Fair Credit Reporting Act requires property owners to get written permission from the tenant or potential tenant before ordering a credit report or other tenant background check.

If you don’t want a future landlord to obtain that information, be sure you don’t sign an authorization form as part of the tenant application process.

If the property owner rejects you based on information contained in a consumer report, they’re required to notify you orally, in writing, or electronically.

This is called an Adverse Action Notice, and the FTC requires it to include:

  • The name, address and phone number of the consumer reporting company that supplied the report
  • A statement that the company that supplied the report didn’t make the decision and can’t provide specific reasons for it
  • A notice of the consumer’s right to dispute inaccurate or incomplete information included in the report, and get a free copy of the report if they ask for it within 60 days

How to find another place to live after an eviction

If eviction is unavoidable, you may have a tougher time finding a new place to live. But it’s not impossible.

Here are some options to consider:

  1. Make amends with your former landlord. If you owe back rent to your former landlord and can pay it off, consider settling the debt. Ask if they are willing to contact the tenant screening company to remove the eviction record in exchange for payment.
  2. Offer a larger deposit. A property owner might be willing to take a chance if you can put up a more substantial deposit initially.
  3. Ask previous landlords for a reference. References can be extremely valuable when trying to convince a new property owner to rent to you.
  4. Be honest with potential landlords. Don’t try to hide your eviction record. Property owners are more likely to trust you if you are upfront with them about your situation.
  5. Look for property owners that don’t order tenant screening reports. Private property owners are less likely to run full background checks than properties with professional management companies.
  6. Work on rebuilding your credit. A property owner’s biggest concern is collecting rental payments each month. A healthy credit score is one way to ease their mind.

Getting evicted from a rental property will have a negative effect on your finances and your life. Whenever possible, avoid eviction at all costs.

Still, if you can’t prevent an eviction, you do have options.

Be prepared to answer questions about your eviction history with potential landlords and explain why it won’t happen again. It might take a little more preparation and persistence to find a new place to live, but if you’re honest and make a good impression, it may be enough to convince a landlord that you can be a model tenant.

About the author

Janet Berry-Johnson is a Certified Public Accountant and freelance writer with a background in accounting and insurance. Her writing has appeared in Forbes, Freshbooks, The Penny Hoarder, and several other major outlets.

Written on August 25, 2020

Self is a venture-backed startup that helps people build credit and savings.
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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