How an Eviction Affects Your Credit

by Bill on May 4, 2012

Getting evicted from your home is disheartening and a stress filled situation. Evictions occur for a number of reasons, but usually come when you are out of time resources and money. An eviction can lead to a financial judgement against you, even if you are renting. This judgement can be placed on your credit report and affect your credit rating.

 

As a mortgage is considered a form of long term credit, rent is considered a type of short term credit, being paid monthly. Evictions are a form of repossession of property for nonpayment of credit. The amount owed by you according to the creditor (bank or landlord) can be listed on your credit file with any of the credit reporting agencies.

 

Evictions and Credit History

Because past due rent can be part of your credit file, bill collectors can open a collection account because of past due rent. The collection account can then remain on a credit report for a seven year term; but be careful here – the time line can go much longer should one of the following happen:

  • the account is renewed ahead of the seven year limit, allowing the clock to start over again
  • the account is sold, and re-sold to different agencies who will also report the account as a separate unpaid account with a separate time limit of seven years per account.

 

Collection accounts can be hard to remove from a credit file even when paid. If you pay off the account, the file will show the account as paid but still reflect a judgement against you. Eventually the whole account will be deleted, but if you don’t take proactive measures it will remain on the file longer. Once the account is paid, work with the credit bureaus to get the account removed. You want this account removed as soon as possible because it can affect:

  • the ability to rent better units
  • the ability to get a home
  • insurance premiums
  • loan interest rates
  • security deposits for utilities or rent

 

On top of all that, you still need a reference from said landlord to move into a new unit.

 

Evictions and Judgement

Another potential problem is how people and business look upon you based on a credit problem. Nearly every business or person dealing with rentals or homeowners checks the past credit. Here’s a few issues I have seen happen:

  • You may need a paper trail showing proof of consistant and timely payments
  • Utility providers may place strict payment guidelines or security deposits before turning on service
  • You can be denied service (even essential service such as gas or electric)

 

So yes, it is very possible for an eviction to affect your credit – even when renting.

William Swan, writer

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{ 1 comment }

Pershy May 28, 2012 at 5:27 am

One way an eviction could indirectly affect your credit score is if it came with a fee or from not paying your rent. If you continue to ignore what you owe, it will go to collections. Thanks for sharing.
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