Our Credit Scores can impact every aspect of our lives. It can determine how employers, creditors, and even landlords look at us. Unfortunately, this can mean a feedback loop where financial hardships mean we miss a few bills, and those bills end up on our credit report, meaning more financial hardships.
Because I consult on financial matters, this article will deal with legal evictions that arose from financial hardship. If you have a case where you feel you were wrongly evicted, I would consult a reputable attorney, many of whom work for free.
How Evictions Impact Credit
There has been good news, according to Brad Blanchard, an attorney with Lexington Law. The Big Three Credit Bureaus have voluntarily stopped reporting many evictions on credit reports.
However, that doesn’t mean they don’t report any evictions. If you’ve been evicted because of failure to pay rent, and the landlord or property manager has sent that to collections, that item will appear on your credit report.
There’s two things to consider, in this situation.
How to Resolve it Yourself
In a recent article, I wrote about actions you can take to improve your credit in a very short period. Many of these options are still available to you if you have past rent in collections. It won’t remove the derogatory mark, but it could alleviate the drag on your score.
If you want to remove the collections, your best bet is to either contact the landlord or manager, or deal directly with the collections company.
Dealing with the Landlord
In the last few years, many landlords have been faced with financial crunches of their own. I know it’s hard to sympathize with a person who has the word “lord” in their job title, but what it means for you and I is that landlords are a lot less sympathetic to our hardships.
If you want to deal with the landlord directly, your best bet is to present a solid case for why you missed rent payments. This could include showing your checking account transaction history and other bills, to prove that you weren’t just flaking–you were in real money pain. If the landlord agrees to remove the item from collections, make sure you get their agreement in writing, and then make copies. You’ll need to present the document to the credit bureaus.
Dealing with the Collection Companies
I haven’t dealt too much with how collections work, but here’s a brief snapshot. If you owe a company $5,000, they can either choose to continue trying to collect that debt, or they can sell that debt to a collections company.
That’s right, sell it. They take the calculated approach that they may never see any of that $5,000, and sell the right to collect it for a percentage of the total. That means your landlord sold your past-due rent to a collection company, usually for around 20-40% of the total amount. (Once a debt is “sold,” that’s the moment it gets reported to the credit bureaus.)
Armed with that information, you can make a deal with the collection agency to pay some fraction of the past due amount, usually far less than the total past due rent. Once you negotiate that amount, you can secure a similar letter as I mentioned before, where the collection agency agrees to report to the Credit Bureaus that your account is not longer “in collections.”
Once You Have That Letter…
It’s time to call the credit bureaus. Usually the collections companies are quick to remove an item, by reporting it to the bureaus themselves. Otherwise, you’ll need to be vigilant and keep calling the bureaus to make sure it’s dropped from your credit. This could take up to two reporting cycles (30 days each, or two months total).
Or Take An Easier Way
If everything I just described sounds like a lot of work, that’s because it is. If you don’t have the time or energy to work through that process, you can turn it over to the professionals.
Credit Saint, for instance, has a great track record of working with collections companies, speaking their language to negotiate settlements. Then, once that’s taken care of, they’ll keep working to make sure that the item is dropped from your credit report in a timely manner.
What I Would Do
If I were in a situation where I needed something as big as an eviction taken off my credit report, I’d definitely consult a credit repair company. All of the ones I’ve reviewed offer money-back guarantees, and many offer free consultations, so you can get an idea of what they’ll do to help.
In any case, don’t get your hopes down. There’s always a way forward, and there’s always someone willing to help.
Every item, of any kind, falls off of your credit after seven years. If it’s been close to that long, you may want to consider how soon you need it off your account. Another thing to consider, the longer a collection company has owned a debt, the more eager they are to negotiate a settlement.
Not necessarily. I hear that option come up a lot, and I honestly don’t recommend it that often. If you were evicted for an illegitimate reason, then absolutely seek legal counsel. But if you were evicted for missing rent payments, and your landlord followed procedure, going to court may just waste your time, money, and energy.
That’s a complicated question. Unfortunately, there are a number of consumer reports that aren’t credit reports. That means that an eviction will stay on your rental record for up to seven years, unless you contact the landlord who put the eviction on your record. You can ask to have it expunged, and paying the settlement will go a long way toward that.