When a consumer fails to pay rent, it’s a bad situation for everyone involved. As a renter, you could have trouble finding another place to live, and your credit scores could take a hit. Landlords are often put in a stressful situation that can be quite costly, potentially damaging their financial stability, as well. It costs an average of $1,917 to evict someone, according to a report from TransUnion.
Paying to get someone out of an income property is almost certainly an unpleasant deal, but at least the property manager can hope to get a more reliable tenant in that unit and prevent further losses. The good news is that the eviction cost has gone down recently, because the rental market has been quite healthy, according the TransUnion report. In the second quarter of 2011, an eviction cost $1,980 on average, $63 more than it did in the second quarter this year. In that same time, rents have increased — they jumped 3.1% since last year alone — but consumers have increasingly been able to handle their monthly housing expenses, alongside an improving economy and unemployment rate.
Still, eviction isn’t a matter to take lightly for either renters or property managers. Those costs not only include lost rental income but also court fees for legally removing someone from your property and repair costs. It depends where you live and the circumstances behind the eviction, but the process can take several weeks.
If your landlord obtains an eviction judgment against you in court, the eviction could show up on your credit report in the public records section. Also, if your landlord sent your unpaid rent bills to a collection agency, your credit will suffer when the collection account appears on your credit report. (If you’re checking your credit scores, which you can do for free every month on Credit.com, you’ll notice your score drop significantly if a collection account appears.) Even if none of that happens, potential landlords may use a tenant screening service, and they’ll probably find out about your eviction that way. Landlords look at your credit reports in addition to rental risk scores, which is why it’s so important to stay on top of all your payments.
If you suddenly realize you won’t be able to make your rent payment, you’ll have to do some budget triage: What can you cut so you can meet all your debt obligations? What will have the gravest consequences if you don’t pay it? What bills might you be able to negotiate? In the case of not being able to make rent, you should reach out to your landlord as soon as you know you won’t be able to pay the whole amount, and see if there’s something you can work out.
More on Credit Reports and Credit Scores:
- How to Get Your Free Annual Credit Report
- What’s a Bad Credit Score?
- How Credit Impacts Your Day-to-Day Life