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How to Stop a Landlord From Ruining Your Credit

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Lori seems to have had bad luck with landlords. When she left her first apartment, she says she cleaned it thoroughly but her landlord charged her $1,200 for a cleaning fee. They kept her $500 security deposit toward that cost, then charged her another $675, which they turned over to a collection agency. In the second case, she had to break the lease, but she says the management of the apartment complex gave her the go-ahead due to the circumstances. Instead of the final bill she said they agreed upon, she received a letter from a collection agency demanding much more.

She’s far from alone. A steady stream of questions and complaints have been posted on the Credit.com blog from renters whose security deposits were held due to what they felt were unfair or excessive charges for repairs or cleaning. Some, like Lori, have also had additional balances turned over to collection agencies, which in turn damaged their credit.

What can tenants do to protect their security deposit and their credit?

The first step is to be proactive. Just like you should inspect a rental car for damage before you drive it off the lot, inspect the property you are renting before you move in.

“Record/video tape the first and last walk-throughs, video tape the condition of the property,” suggests Los Angeles Realtor Chantay Bridges. “Include and note any damage before and after.”

And although the lease may feel like something you just have to accept as is, be sure to read it and ask questions if you don’t understand any part of it. The lease is, after all, a contract and the time to raise any issues is before you sign it, not after. (Of course if a lease violates state landlord-tenant laws, certain provisions may prove to be unenforceable.)

“Many states have addenda to the lease that have to be filled out within X number of days after move-in by the tenant, the purpose of which is to represent the condition of the house on move-in,” says Copley Broer, CEO of LandlordStation. “A huge number of tenants get caught up in moving, etc., and never fill these out; so when they move out the landlord blames damage on the tenant when that damage was already there. In reality, though, the tenant is just as responsible for ignoring a portion of the lease that they should have taken more seriously.”

If you discover any problems after you move in, make sure you share your concerns with your landlord in writing — certified mail is preferred — and keep a copy of your letter for your records.

If you believe the problem jeopardizes your health or safety, you may want to get a third party involved. “A tenant can request an inspection by the local housing department,” says Washington D.C.-based attorney Thomas J. Simeone. “Those inspections often result in an order to the landlord to make repairs that the landlord has refused to make. Not only does this provide a more habitable premises, it also avoids any claim that the (damage was) caused by the tenant.”

Before You Move Out

Before you leave, ask the landlord to be present for a final walk-through and get a signed copy of a list of needed repairs, if any. Photos and/or video are a good idea here as well.

And if you did ruin part of the carpet or put a hole in the wall? Own up to it and document it. “A tenant should document (damage) done to the property during the tenancy — both due to the tenant and to other causes,” says Simeone. “This will ensure that the tenant is fairly charged for damage it caused and nothing more.”

You Have Rights

State landlord-tenant laws will often spell out the landlord’s responsibility with regard to security deposits. It will usually specify, for example, how quickly the landlord must return the deposit.

In most cases, landlords can’t keep a security deposit to cover the cost of normal wear and tear. They may be required to provide the tenant with a written, itemized list of damages, and give them a certain number of days to dispute those charges. If a landlord fails to follow the rules, he or she may have to return the entire security deposit to the renter and may be liable for damages. You can research state landlord-tenant laws through the U.S. Department of Housing and Urban Development.

Protect Your Credit

Good credit is especially important if you rent, because the next time you move, a prospective landlord will check your credit. And if you decide to buy, your credit score will directly impact the interest rate you get on your mortgage.

To help protect your credit, make sure your landlord has your new address in case they need to get in touch with you about any problems. And follow the advice above to ensure that there are no surprises about extra charges assessed after you move out.

It is also a good idea to at least check your free credit reports each year and monitor your credit scores more frequently. You can get a free monthly credit score from a service like Credit.com. If a collection account appears on your credit reports, you’ll want to know right away so you can respond quickly.

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Image: charles taylor

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