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When you sign a lease to rent a house, your rent is usually due on the first day of each month. Normally, if you’re a few days behind on your rent, that’s okay. This is because most rental contracts have a grace period, where you are technically allowed to pay your rent on the third, fourth, or fifth day of the month without penalty or negative consequences. But paying late beyond this point could result in late fees and also put your credit score at risk.
Will Late Rent Payments Affect Your Credit Score?
If you are behind on a mortgage payment, you can count on it hurting your credit score. But what about late payment of rent? The impact there is a bit complicated.
For one thing, not all landlords report rent payments to the credit bureaus that prepare your credit reports. It can be a good thing and a bad thing. If you pay your rent on time, this activity could help boost your credit score. But if you are late with your payments, it could hurt your credit score.
Even if your landlord Is report rent payments, some credit score models do not include rent payments in their calculations. If you come across a situation where you are late with your rent, your landlord reports it, and it is used in your credit score calculation, you could see that number drop significantly.
There is no specific number you can expect your score to drop, as it will depend on the score model used and how your credit score looked before your late payment. Believe it or not, the higher your credit score, the more impact a late payment can have. As such, if you are late in paying your rent, you need to prepare for the negative consequences.
What to do in case of late payment of rent
There are different reasons why you might be late paying your rent, ranging from a simple oversight to not having enough money to pay your landlord. If you encounter the first situation, try to rectify it immediately. Make your payment as soon as you remember and ask your landlord not to report you as late. If you generally make your payments on time, your landlord will likely give you a bit of slack, especially if this is your first offense.
If you pay rent late because you have no money, rather than just not send this check, contact your landlord and explain your situation. Perhaps your working hours have just been cut, or you are temporarily facing a financial crisis. If you are a tenant in good standing, your landlord may give you more time to pay without negative consequences.
Late payment of rent can affect your credit rating. Beyond that, it could also lead to late fees, depending on the terms of your lease, and put you on the bad side of your landlord. This is not a good place if your lease is about to expire and you are hoping to renew it. Granted, a single late payment might not cause your landlord to deny you a renewal, but you’d better not take the chance. Instead, do your best to pay on time or be proactive in communicating with your landlord.
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