How a 3-Day Notice Can Affect My Credit

Apartment defaults were at an all-time record 4.6 percent in May 2010, in large part due to tenants failing to meet their rental obligation, according to Real Capital Analytics. Landlords often serve a 3-day notice to pay rent due or face eviction as a collection tactic. While this probably won't hurt your record, an ensuing lawsuit or collection account will.

Identification

A 3-day notice to evict does not have an immediate impact on credit, because it is a private communication between the landlord and tenant. In addition, the credit bureaus do not report rental history for most tenants because landlords rarely subscribe to a credit reporting service due to the cost. As long as you pay the debt in a timely fashion, it will not affect your credit files with the three national bureaus. The landlord, however, may report the incident to a tenant screening service, which can make it difficult to get an apartment in the future.

Considerations

If you fail to pay off the debt, the landlord might sue for a judgment, such as a wage garnishment. Judgments are part of the public record and the major credit bureaus report them if it includes an issue involving a debt, according to MyFICO.com. Judgments can do serious damage -- how much is unknown until the FICO formula factors in other data in your credit history. The landlord could also sell the debt to a collection agency. Collection agencies often report to the bureaus and a collection account does about the same damage as a judgment.

Potential

One of the major credit reporting bureaus -- Experian -- started reporting rental history after it acquired RentBureau in 2011. In 2011, Experian only reports positive data, but will start incorporating negative data in 2012 and beyond, according to Martha White of Wallet Pop. How negative rental history will affect credit is still up in the air in 2011, but any negatives are usually terrible for a credit score.

Tip

The laws for stopping an eviction depend on the state and area in which you live, but you can always prevent a potential lawsuit or collection account from appearing on your record by paying the back rent. The landlord might work with you on a payment plan to meet the rest of your lease obligation, such as deferring rent for a few months if you can prove you will be financially solvent soon. Communication with the landlord is essential and ignoring the problem is the worst thing you can do.