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How an eviction affects your credit rating

A rental agreement is a legally binding document, wherein you the tenant are agreeing to your landlord’s terms. However, if you do not uphold your end of the arrangement, your landlord can evict you. Evictions can happen when tenants fail to pay rent, do not obey property rules or damage the rental property.

Being evicted from a rental property can hurt your credit score. Since your credit score impacts your ability to get loans, apply for new rentals and even get a new job, avoiding something that will hurt it is best. While evictions do not show up directly on credit reports, eviction related information will and lenders and landlords can easily spot these on your credit report.

Financial judgments

If your landlord uses the court system to evict you, a judge may order you to pay a financial judgment for your back rent and any fees your landlord incurred relating to the eviction. The judgment will be placed on your credit report in the public records section. Lenders and rental agencies reviewing your credit report will see the judgment and assume you were evicted.

Paying off a judgment will not remove it from your credit score. However, once you have paid off the judgment, your credit report will reflect that payment. Potential lenders and landlords will view paid judgments in a more positive light as compared to unpaid judgments. The judgment can stay on your credit report for seven years.

Collections and screenings

Even if your eviction does not go to court, your landlord can still report the money you owe to a collection agency in an attempt to solicit the funds you owe. Having a debt reported to a collection agency will lower your credit score.

Your landlord also has the ability to report you to a tenant screening service. This is a service used by landlords to screen potential rental candidates. Renting another apartment would be difficult if the landlord checked the screening service and saw your eviction.

Abiding by your rental agreement is the best way to avoid an eviction. Remember, when you signed your rental agreement you were committing to abiding by your tenants rules and paying your rent. If something comes up where you are struggling to pay your rent, talk to your landlord. They may be willing to work with you in order to avoid having to find another tenant.

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