Credit Advice

Broken apartment lease contract can affect your credit report

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Credit Advice

Broken apartment lease contract can affect your credit report

Dear Experian,

I recently asked my landlord to end my lease early. Her response was, "You must pay your lease, and as you contracted. Or, you can suffer severe credit damage."

Is this true? Can she make a report to Experian and the other credit bureaus that will post to my credit history?

- EPH

Dear EPH,

A contract is a contract, whether for a health club membership, car lease, or apartment rent. Please take signing them very seriously. As you have found, a contract can have serious implications long after you signed it.

Your landlord probably will not be able to report the broken lease directly to Experian, but it still could have a negative impact on your credit report.

Rent and lease payments are rarely reported to the national credit reporting companies at this time. An independent rental owner, like your landlord, would find it difficult, if not impossible to meet the membership, security and legal requirements to report your rent or lease payments directly. Even if she were able to meet those requirements, the cost of subscribing directly to Experian’s services would be prohibitive.

It is far more likely that your landlord would sue you in a small claims court for breaking the lease contract. That would result in a civil judgment. Judgments are debts you owe as the result of a lawsuit and would appear on your credit report. They are considered negative.

Judgments remain seven years from the filing date, so can adversely affect your credit history for a long time.

Another possibility is that your landlord could hire a collection agency to encourage you to repay any amount that you still owe under the lease contract. The collection agency could subsequently report that amount as a collection account on your credit history.

Collection accounts remain seven years from the original delinquency date, in this case from the time the account is turned over to collections, since that is the date the account was created.

Thanks for asking.

- The "Ask Experian" team

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