If you’re thinking about leaving your apartment before your rental term is up you might be wondering, “Does breaking a lease affect your credit?” Under certain circumstances, breaking a lease could affect your credit score which might impact your ability to get a good personal loan or other financial products. If you’re thinking about breaking your apartment lease, consider the ramifications.
An apartment lease is not a mortgage, so your landlord doesn’t report payment activity to the credit bureaus. But, if you break your lease, that can trigger a mark on your credit history much like a delinquent loan would. But does breaking a lease hurt your credit score? Here’s how it might affect your credit history:
If you explain the reason you’re breaking the lease with your landlord, he/she might understand your circumstances and not penalize you. If you’ve been a good tenant and get along with your landlord, it’s worth a try.
Before you break your lease, read your contract — you need to know your rights. Your contract might have a clause in it requiring you to give a couple months’ advance notice that you want to leave. It might require that you find someone to sublet the place.
Some landlords will let tenants out of leases early if they find someone to rent the place. You can find someone to sublet or take over your current lease, but remember: You’ll remain responsible for any damage to the apartment or rent that’s not paid.
You can also find someone to sign a new lease agreement and pay his own security deposit. Many times, this type of search becomes the responsibility of the landlord. It might be wise to save your landlord some work and keep yourself in his good graces which will help if you need to use him as a reference at some point and find someone to sublet yourself.
Your lease likely contains a termination offer which could entail anything from paying a few months’ rent to giving up your security deposit in exchange for breaking your lease. If you talk to your landlord, he might reduce the fees or agree to return your security deposit.
It’s always a good idea to get any legal agreements in writing. Communicate with your landlord via email, and if you do need to talk to him, take notes about the conversation; then write him an email summarizing what was said and ask him to confirm receipt.
By Barri Segal