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Understanding the Impact of Missed Rent Payments on Your Credit

At O1ne Mortgage, we understand the importance of maintaining a healthy credit score. If you have any mortgage-related needs, feel free to call us at 213-732-3074. In this article, we will explore what happens if you miss a rent payment, how late rent payments can affect your credit, and how to find out if your rent is being reported.

What Happens if I Miss a Rent Payment?

Missing a rent payment can have several consequences. Typically, lease agreements include penalties for late payments, and you may or may not have a grace period depending on your contract. Missing a payment means you are in breach of your lease agreement, which could lead to eviction, although eviction laws vary by state. Additionally, your landlord might report the late payment to credit bureaus, potentially damaging your credit score.

Do Late Rent Payments Affect Credit?

While on-time rent payments don’t usually help build your credit score, missing a payment can harm it, especially if the payment remains delinquent for an extended period. Here are some scenarios:

• Your landlord could report late payments to credit bureaus if your rent is unpaid for 30 or more days.
• Your landlord might sell the debt to a collection agency, which will then report it to the credit bureaus.

Both scenarios can negatively impact your credit score, with the negative item remaining on your credit reports for up to seven years.

How to Find Out if Your Rent Is Being Reported

If you’re concerned about how a late rent payment could impact your credit score, or if you want to know if your on-time payments are helping your credit, consider the following steps:

• Review your lease agreement: Look for clauses indicating that your landlord may report payments to credit reporting agencies.
• Ask your landlord: Inquire about their policy regarding late payments and credit reporting.
• Check your credit report: Register with Experian to get a free credit report and review your history for rent payments. You can also get copies of your TransUnion and Equifax credit reports through AnnualCreditReport.com.

If your on-time rent payments aren’t being reported, consider signing up for Experian Boost® to see if they’re eligible. This service allows you to add eligible positive rent, utility, and streaming service payments to your Experian credit report, potentially increasing your FICO® Score.

The Bottom Line

Unlike mortgage payments, rent payments aren’t always reported to credit reporting agencies. While this means positive rental history may not improve your credit, a missed rent payment is less likely to damage your score. However, late rent payments can hurt your credit if your landlord reports them or sells your debt to a collection agency.

To prevent this, contact your landlord if you can’t make rent and ask about relief options. You can also seek financial assistance for rent or other necessary expenses. Regardless of whether your landlord reports late rent payments, monitor your credit regularly to understand how your actions impact your credit score.

For any mortgage-related needs, don’t hesitate to call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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