Moving out of a rental before the lease ends is referred to as breaking your lease. Although Experian does not show broken leases, evictions or public records on your credit report, a broken lease may still impact your ability to buy a house.
When you break a lease, there are often fees associated with doing so. If you don't pay those fees in a timely manner, the landlord or leasing office may sell the unpaid debt to a collection agency. Once a collection company purchases the debt, they can report the account to Experian and the other two credit reporting companies.
Collection accounts are considered very negative and can have a substantial impact on your credit scores, making it more difficult to qualify for a home loan. Even if you do qualify, the presence of a collection may stop you from qualifying for the best interest rates and terms.
Information on broken leases often appears in a tenant screening report. Tenant screening reports are typically utilized by prospective landlords or leasing agencies when you apply for or cosign for an apartment or other rental property.
Although your mortgage lender may not review tenant screening reports, it's possible that they may ask for rental history references and contact your previous landlords to verify your history of rental payments
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Scoped on: 10/11/2018