How An Eviction Affects Your Credit Score (And What To Do About It)
If you’re wondering how an eviction will affect your credit score, we’ve got to be honest with you: it’s not good.
Although an eviction won’t directly appear on your credit report, eviction-related information could show up and seriously damage your score.
In this guide, we’ll go over how an eviction affects your credit score and what you should do about it.
There are three ways an eviction affects your credit:
- 1Damages your credit score. Let’s face it, an eviction will harm your credit report since it shows your inability to fulfill your financial obligations.
- 2Makes it difficult for you to rent in the future. If a landlord engages you in a legal battle and wins the eviction case against you, the judgment placed in the public records section of your credit report means that renting property in future won’t be easy.
- 3Hurts your chances of getting approved for a mortgage. Should you require financing in future, eviction-related information on your credit report will easily disqualify you for a loan.
Let’s walk through these consequences in more detail and assess what you can do if you’ve been evicted.
Can you remove an eviction from your credit history?
Unfortunately, you can’t remove an eviction from your credit history [source].
Public records like civil court judgments (such as evictions), tax liens, and bankruptcies remain on your credit report for seven years from the date they were filed and will seriously damage your credit score.
What’s more is that collection accounts appear on the public records section a credit report.
What does this mean?
Well, if you didn’t pay your rent and your account was transferred to a debt collection agency, a collection account for the unpaid rent is listed—and these collection accounts stay on your credit report for 7 years from the date the debt was accrued.
How an eviction affects your credit
Your eviction is technically not reported to any of the three credit bureaus—Experian, Equifax, or TransUnion.
But the catch here is that this information might be reported as a judgment or collection on your credit report.
If you get evicted, one way your landlord could handle your missed payments is to transfer your account to a debt collector, which will get reported to the credit agencies. Collection accounts remain on your credit report for seven years from when the debt was six months overdue, and will lower your credit score.
If your landlord sues you for violating the lease and obtains a judgment against you, the judgment would show up on your credit report under the public records section and stay on there for seven years.
Take note: civil judgments and collections are among the FICO delinquencies that will result in a lower credit score since many agencies are now using this information to determine your ability to meet all your financial obligations.
What is an eviction, anyway?
An eviction is when your landlord goes through the legal process to have you removed from their rental property. [source]
Getting evicted really shouldn’t come by surprise as the landlord must provide you with an eviction notice, specifying the deadline you must leave the property by.
If you’re still occupying the property after the deadline, you could find yourself going through the court eviction process.
If you do move out before the deadline, this might keep the eviction off your credit report, provided you pay all overdue fees.
When can you be evicted from your rental property?
The reasons for getting evicted from your rental property are typically outlined in your lease agreement, but here are a couple of common examples:
Not paying your rent
If you fail to pay your rent, your landlord would be entitled to issue a notice to pay or quit.
In plain English, you are given the option to either pay your rent, or leave the property, by a certain deadline.
If you pay, you’ll have the eviction notice nullified almost instantly. But, if you fail to pay and insist on remaining on the property, your landlord could file a lawsuit seeking your eviction and request compensation for what you owe.
Violating your lease agreement
You could also face an eviction when you violate one or several terms of the lease, such as playing loud music or subletting your unit without permission.
If this happens, your landlord would typically give you a warning or a deadline to fix the issue and comply with the lease.
Property destruction or unlawfulness
If you damage the rental property excessively, you could also be evicted, and the same goes for doing any illegal activity or acting inappropriately on the property.
Surprisingly, you could receive an eviction notice after performing improvements on the property, which were not allowed or approved in the lease agreement.
No cause eviction
Did you know your landlord can “evict” you for no good reason, especially if you’re on a month-to-month lease? Maybe they want to move into the property themselves, or sell the property, or let their relative move in; there could be a lot of good reasons.
And unless you are in a rent-controlled property, your landlord doesn’t have to provide you with any kind of explanation, provided there’s no discrimination.
When you’re evicted under no cause, you have between 30 and 60 days to vacate.
Your housing options if you've been evicted
Sad but true: if you’ve been faced an eviction, your options for renting a new property are going to be very hard to come by.
That’s because any new potential landlord will most likely go through your credit reports, where your collection and/or judgment from your prior eviction will show up.
(Not sure whether your eviction is listed? Requesting a free annual credit report is the quickest way to find out).
Although an eviction will hamper your ability to find a place to live, there are a few viable options for you:
If your credit report shows debts owed through civil judgments or collection agencies, it will obviously raise a red flag on your next rental application.
You’ll also have difficulty getting a mortgage approval or any personal loan during that seven-year period because your credit will have taken a huge hit. So your housing options are not only difficult if you’ve been evicted, but there’s also a limit to the credit you can access in future.
Most landlords use tenant-screening services on potential renters, and there’s a chance they will alert your landlord of your previous eviction, even without a credit check. Tenant-screening companies track down your past renting history, including whether you met all your rent obligations.
Facing an eviction is serious business and the impact to your credit score can be very damaging.
You do have a handful of other housing options if you've been evicted, and you should try your best to not allow it to happen again because your credit will suffer as a consequence and you'll have to work really hard on rebuilding your credit going forward.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.