20 Jan Does Breaking a Lease Hurt Your Credit?
Most people sign a lease when renting a house or an apartment. As a renter, you agree to pay rent for a certain time and to follow any other rules set forth by the lessor. However, if your life changes, you may need to break your lease. Will ending your lease early affect your credit score? At Pivotal Wealth, we help our clients through financial transitions of all sorts, and we can help you determine whether or not breaking your lease will hurt your credit.
Breaking a Lease and Your Credit Score
Good news—breaking your lease won’t show up on your credit report. However, that doesn’t mean it can’t hurt your credit score in other ways. Breaking a lease is never a decision that you should make lightly.
There is a chance that your lease agreement has a policy or steps for you to follow if you need to break a lease early. This could include providing the lessor with a certain amount of notice before terminating the lease, paying a certain number of months’ rent, paying an early termination fee, or forfeiting your security deposit. This will vary from lessor to lessor, and each unique situation is different.
Sometimes, your agreement won’t specify any consequences for breaking a lease, but that doesn’t mean there aren’t any. Many states have laws that require lessors to find replacement tenants. They might require you to pay rent until the lessor finds a new tenant, which could take several months or up to the entire duration of your lease.
If you aren’t able to pay your rent after breaking a lease, you could face several issues. You may have difficulty finding a place to rent in the future if you have a history of failing to pay. Your lessor could also turn you over to debt collection agencies in order to secure the unpaid rent. Your lessor could also sue you for outstanding unpaid rent. Any of these things could negatively affect your credit score.
When in Doubt, Seek Help with Debt Reduction
Pivotal Wealth helps ordinary people become debt free. Owing money means you’re not able to invest in yourself or build your wealth. Missed payments, debt collectors, and lawsuits can hurt your credit score and put you even further in debt. If you’re in debt from breaking a lease early, we can help. Give us a call today to learn more!