Will an Eviction Hurt My Credit Score?
by Maurie Backman | Updated July 21, 2021 - First published on Sept. 2, 2020
It pays to avoid an eviction for more reasons than one.
Evictions have been in the news a lot lately due to the COVID-19 crisis. Earlier in the year, the federal government and many individual states put eviction bans in place to protect struggling renters. But unfortunately, as those bans expire and unemployment benefits and other assistance dries up, millions of Americans are at risk of becoming homeless. Specifically, a frightening 19 to 23 million renters are at risk of eviction by September 30, according to The Aspen Institute.
But evictions were a problem well before the COVID-19 pandemic. Between 2000 and 2016, roughly 1 out of every 40 renter households was the subject of an eviction.
If you're evicted, it will clearly impact your living situation for the worse. But what about your credit score?
Evictions have consequences
Unfortunately, an eviction could negatively impact your credit score. If your landlord is forced to file a formal eviction notice against you in court, and he or she obtains a judgment against you, that judgment will go on your credit report and damage your credit score.
Of course, that won't happen overnight. Your landlord is required to give you notice before applying for a court order, and so you'll be given an opportunity to address the reason your landlord is seeking to evict you. If the problem is unpaid rent, for example, you'll be given a chance to come up with your missing rent. And if you do, the matter won't go to court, and so there won't be a judgment against you. As such, a simple eviction notice from your landlord won't hurt your credit score. But a formal judgment from a court will.
Also, if your landlord turns your unpaid debt over to a collection agency, that debt will impact your credit score negatively, as would any other outstanding delinquent debt in your name.
Once your credit score goes down, it will be harder for you to rent a new home because you'll be considered a risky tenant. It will also be harder for you to get a loan or a new credit card if you need one. Furthermore, an eviction can stay on your credit report for up to seven years, so it's important that you try to avoid reaching that point.
Another thing to keep in mind is that if you've been evicted from your home for not paying your rent, that information will come up on a tenant screening. That, combined with a hit to your credit score, could make it difficult to rent again in the future.
How to avoid an eviction
Evictions are a relatively lengthy process. The exact laws vary by state, but there are several legal steps involved. And, as mentioned earlier, your landlord is required to give you notice before having you removed from your home.
Generally, tenants wind up getting evicted because they're either behind on rent or because they violate another term of their lease (for example, smoking inside an apartment when doing so is prohibited). If money problems are causing you to become delinquent on rent, thereby putting you at risk of eviction, it pays to talk to your landlord about the hardship you're facing and see if he or she is willing to work something out. Your landlord might agree to let you postpone some rent payments, or pay just a portion of your rent until your income situation improves.
One thing you should know is that the eviction bans that were put in place earlier in the year expired in late July and have not been extended. As such, don't assume that your landlord doesn't have the right to begin the process of evicting you. The good news, again, is that eviction isn't an instant process, and your landlord is required to give you notice, which means you may have time to work out a deal.
If your landlord doesn't seem eager to work with you, it wouldn't hurt to bring up the fact that evictions can be both lengthy and costly. Your landlord will need to pay court (and possibly legal) fees to move forward with the process, so rather than go that route, he or she may instead agree to cut you some slack. But if you're a tenant in good standing who's simply going through hard times, hopefully it won't even come to that.
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