Does Delinquency on Rent Payment Affect Your Credit Score?

Delinquent payments can significantly impact your credit score if the creditor reports the delinquency. Many commercial lenders, such as banks and credit card issuers, automatically report delinquent payments to at least one credit bureau. Commercial rental agencies typically report a delinquency on your rent payment. Independent homeowners may not report the rent payment delinquency; if the issue is not reported, the late payment will not affect your credit score.

Delinquency Definition

In a standard credit agreement, payments are not considered delinquent until they are past due for over 30 days. Rental agreements may define delinquency differently, allowing the renter only five to 15 days before the rent payment is considered delinquent. The rental agency, property owner or landlord may report the rental payment to the credit reporting agencies as delinquent in accordance with the terms of the rental agreement. For example, if your rent is due on the first of the month, and your contract states that the payment is delinquent as of the fifth of the month, a payment made on the sixth of the month can negatively affect your credit score.

Credit Reporting Laws

The Fair Credit Reporting Act (FCRA) stipulates that all consumer credit reporting agencies list accurate account information for a specified time frame. A delinquency on your rent payment must be reported in accordance with the rental agreement. In addition, the delinquency may remain on your credit report for seven years. Payment delinquencies affect the payment history portion of your credit score calculation, which is the most significant factor.

Credit Score Calculation

Potential lenders view delinquent payments as negatives on a credit report, but your overall score calculations include more than your payment history. Consumer credit agencies weigh payment history as 35 percent of your overall credit score. Your credit-to-debt ratio weighs in at 30 percent, the length of time youve held credit accounts equals 15 percent, a variation of credit accounts makes up 10 percent, and new credit accounts factor in at 10 percent. Other factors such as judgments and bankruptcies play a role in your overall credit score.

Consumer Options

If a rent payment delinquency, or other negative item, is reported to any of the three credit reporting agencies incorrectly, you can file a dispute to have the entry removed. Experian, TransUnion and Equifax simplify dispute filing with a web-based system; visit each companys website to dispute incorrect negative information. A rent payment delinquency is not accurate if it occurred more than seven years ago or if it is not in accordance with your rental agreement.