Every time you rent a house or an apartment, you usually sign a lease agreement with the property manager or homeowner. Once you sign this lease agreement, you will be obligated to pay a certain rental amount for a particular timeframe. For instance, the agreement can be good for 2 to 3 years.
Unfortunately, not everyone stays throughout the duration of the lease. The unexpected can happen so you might be left with no choice but to terminate or break the lease earlier than what was anticipated by both parties.
While landlords consider several factors to allow you to break your lease with no consequences, how does breaking a lease affect your credit score?
Will, It Hurt Your Credit Score If You Break Your Lease?
It is not really an ideal situation to break your lease and you should only do it as your last resort because a broken lease on your credit report impacts your credit score and makes it difficult to rent in the future.
The following are the possible repercussions if you break off your lease:
- Collections
When you owe your landlord money because you failed to pay your rent, the landlord can turn this over to the collection agency. Credit bureaus will get the details of your rent delinquency.
- Future Rentals
Prospective landlords may possibly find the record of your judgment or unpaid rent or broken lease. Most landlords perform background and credit checks. They might refuse to rent their property to you if your credit report indicates a broken lease.
- Small Claims Court
The landlord may also take you to the small claims court because of your unpaid rent due. Judgment can be filed against you where you will be required to pay the money you owe. This can impact your credit score as a form of public record.
How to Break Your Lease With No Effects on Your Credit
If you ever find yourself in a dire situation where your only choice is to break your lease, there are several tips you can follow to break off your lease and minimize its negative effects on your credit score.
- Talk to your landlord.
This gesture will be appreciated by landlords and can usually work in your favor.
- Look for a replacement.
Your landlord might be able to fill their property sooner if you help him promote the vacancy.
- Record everything.
See to it that you record all the communications you have with your landlord so you protect yourself if legal action ensues.
- Know your rights.
Don’t forget to read your lease agreement properly to understand all the conditions. Be familiar with the local laws in your area to know how these are related to your specific situation.
- Sublet the apartment.
When you sublet your apartment, you look for a trusted person who will continue the lease using your name. Here, you are not really breaking the lease although you might be held accountable for damages and rent. Make sure you determine if subletting is allowed in your lease and request your replacement fill out the sublease agreement.
Your credit doesn’t have to suffer if you break your lease but be proactive enough to prevent damages as much as possible.