How Renters Can Protect Their Credit If They Can't Pay Rent Due to the Coronavirus Crisis

Learn how and when unpaid rent might show up on your credit reports and what you can do to protect your credit.

By , Attorney

Many states, counties, and cities have placed a ban on evictions for nonpayment of rent during the coronavirus (COVID-19) outbreak. Also, the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act makes it unlawful for landlords to evict renters living in single-family and multifamily properties for 120 days during the national emergency. (This prohibition applies to properties financed by federally backed mortgages and properties that participate in a covered federal housing program.)

But even when an eviction moratorium is in place, that doesn't mean you get a rent holiday during this time. Not paying rent might hurt your credit score and, once the moratorium expires, could eventually lead to an eviction that will probably show up on your credit report.

In this article, you'll learn how and when unpaid rent gets noted on your credit reports and what you can do to protect your credit scores if you can't afford to pay the full, or even any, rent during the coronavirus pandemic.

How Not Paying Rent Might Affect Your Credit

If you don't pay your credit card bill, car loan, or mortgage, the creditor will report the delinquency to the three major credit reporting bureaus (Equifax, Experian, and TransUnion) and an adverse notation will appear on your credit reports. What's in your credit reports affects your credit scores, so if your reports show negative events, then your scores will fall.

Unpaid rent, however, isn't usually directly reported to the credit bureaus—especially if you rent from a landlord with few units or properties. Because a landlord would need to become a member with the bureaus and have a minimum number of active accounts to report unpaid rent; generally, only high-volume landlords report overdue rental payments.

But all three major credit bureaus will include rent payment information in their reports if they receive it. And some versions of the FICO score include rental payment information when available, while others don't.

Some Specialty Credit Reporting Agencies, However, Focus on Rental Histories

Specialty credit reporting agencies gather and report only particular types of information on consumers, such as tenant histories, check writing histories, employment histories, and insurance claims. These agencies, similar to the main bureaus, collect information about consumers from a variety of sources, compile reports, and sell them to businesses.

So, if you're applying as a tenant for a residential property, the landlord or management company might use a specialty reporting company to screen you. A tenant (or "rental") history report lists your previous addresses, rental payment history, evictions, and other information obtained from previous landlords and court records. A few companies that produce this kind of report are LexisNexis, CoreLogic, and Experian RentBureau.

A specialty tenant screening report that contains negative information about you might result in a future rejection of a lease application. Or you might get approved, but you'll have to pay more or comply with additional lease conditions, like paying rent in advance. Managers of multi-unit buildings are more likely to request a tenant history report than the landlord of a single-family home or a landlord who has just a few units.

You can check your specialty reports to make sure the information that the various agencies have about you is accurate. The Fair Credit Reporting Act gives you the right to get free copies of specialty consumer reports once every 12 months. To find a list of tenant screening consumer reporting agencies, check the CFPB's List of Consumer Reporting Agencies.

Alternate Credit Scores and Rent-Reporting Services

In recent years, several alternative credit reports and credit scores have become available, along with opt-in rent-reporting services. People usually join these kinds of services to try to improve their credit scores by ensuring that rent payments are included in their credit history.

Alternative credit reports and scores. Alternative credit reports and scores include information, like rent payments, when creating a report and score. Payment Reporting Builds Credit (PRBC), for example, tracks payments, including rent, that aren't usually included in a standard credit report to produce an alternative credit score. To get this score, you'd need to sign up with PRBC.

Rent-reporting services. Once you sign up for a rent-reporting service, the company provides information about your rent payments to the credit bureaus. If you sign up with Zingo, for example, the company reports your rent payments to Equifax. Zego, on the other hand, reports rent payments to Experian RentBureau and TransUnion. (With Zego, though, only positive, on-time rental payment data is submitted—missed payments aren't reported.) The major credit reporting bureaus don't share information with each other, so rent payments reported through some services won't necessarily appear on all three of your main credit reports.

Collection Agencies and Evictions

Another way that overdue rent might appear on your credit reports is if the landlord sends the debt to a collection agency. Then, the agency can report the collection account to the credit bureaus. Or, when an eviction shows up in the public record, that information will most likely be included on credit reports.

What to Do If You Can't Pay Full Rent—or Any Rent—During the Coronavirus Crisis

If you rent from a landlord with just one or only a few properties and haven't signed up for any rent-reporting options, the three main credit reporting bureaus (again, Equifax, Experian, and TransUnion) probably won't find out if you miss a few rent payments. But the delinquency might affect a specialty credit report. Your best bet to avoid damaging your credit is to negotiate an amendment to the terms of your lease or rental agreement, getting your landlord to agree to reduce or suspend your payments for a while. If you've opted into a rent-reporting service, like RentBureau, and you make an agreement to temporarily stop paying rent or pay less each month, make sure your landlord updates your rental information with the company.

If you rent from a large organization and need a rent reduction or suspension, again, you can try to amend the terms of your lease. You should also inquire whether the company reports unpaid rent to the credit bureaus. If so, you can ask them not to report you as delinquent and, if they agree, even write it into the terms of the amendment.

You can also ask your landlord to use a special code, one for natural disasters that adds a comment to the report. This code might make a difference in the future if a potential lessor or creditor actually reads the full report. But any debt reported as delinquent still shows up as negative on reports and can hurt your FICO credit score. FICO doesn't factor this kind of code in when calculating credit scores, although VantageScore will disregard late payments for accounts with a disaster code.

The Federal CARES Act Might Protect Your Credit

If you make an agreement for payment relief before you fall behind and your landlord qualifies as a "furnisher" of information to the credit reporting bureaus, the CARES Act prohibits the addition of negative information to your credit reports. (A "furnisher" is an entity that provides information to one or more bureaus for inclusion in a credit report.)

Under the CARES Act, which amends the Fair Credit Reporting Act, if a furnisher agrees to let you make partial payments or forbear any amounts (called an "accommodation" under the law) because you were affected by the coronavirus pandemic during the covered period, that furnisher must report your account as current to the bureaus—so long as you weren't already delinquent on payments. (The covered period begins January 31, 2020, and ends 120 days after enactment, or 120 days after the date the national emergency declaration for the coronavirus is terminated, whichever occurs later.)

Getting Help

To get suggestions on how to vary particular clauses in a residential lease in light of the coronavirus emergency, read Coronavirus-Related Amendments to Your Residential Lease. If you need help preparing an amendment to your lease or rental agreement, Nolo's Every Tenant's Legal Guide provides an Amendment to Lease or Rental Agreement form. If you need further assistance, consider talking to a Landlord-Tenant attorney.

Also, Nolo's Blog provides a List of Resources and Assistance for Renters and Landlords Affected by COVID-19.

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