Leaving or walking away from a lease can affect your credit score in certain situations. A lease agreement is a contract. People who lease homes or apartments agree to pay rent for a certain number of months. If they break the lease by leaving early, the landlord can sue for the balance remaining on the agreement in most cases. The same is true for other types of leases, including automobile leases. A lawsuit could lead to a court judgment and garnishment of your wages or bank account or wages -- all bad for your credit score.
Considerations
Leaving a lease early without negotiating with the landlord or owner is usually not a good strategy. Falling behind on the rent and skipping out on the remaining months could prompt the landlord to sue for breach of contract. Proving such a case in small claims court is easy for the landlord and would lead to a judgment ordering you to pay for the remaining months on the agreement.
Credit Reports
Major credit reporting bureaus such as TransUnion, Equifax and Experian regularly monitor court decisions and will add a judgment to your credit report. Once added, the judgment will remain on your credit report for seven years. If you fail to pay the judgment the landlord can seek garnishment, which also would appear on your credit reports.
Credit Scores
Credit scores range from 350 to 850, with scores of 720 or higher representing outstanding credit. It's impossible to predict how a judgment or garnishment for leaving a lease would affect your score because all credit situations are different. Someone with an excellent credit score could theoretically lose more than 100 points after a judgment and garnishment, while someone whose credit is already bad might lose only a few points. Scores below 620 are poor.
Other Factors
Potential damage to credit scores is only one penalty for leaving a lease early. Someone sued for walking away from an apartment lease might find it difficult to gain credit approval for another rental property. Landlords checking the person's credit will see the court judgment if they conduct a credit check. The landlord may reject the application as a result or require a higher security deposit.
Solutions
People who must leave their leases early should work something out with the landlord or lessor. For example, an apartment complex may allow a renter to leave early with a nominal penalty if there is a waiting list for units. Or a landlord renting a house may agree to a settlement on the remaining months of the lease. Settlements often allow a person to pay less than the full amount due on a debt obligation.
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