If your landlord takes you to court for breaking your lease and wins, the resulting judgment will affect your credit. The act of getting sued does not affect your credit standing; if you win the lawsuit, your credit will not be affected. Civil judgments can impact your credit standing for decades in some states.
Judgments
Judgments are court rulings that result from getting sued by a creditor, such as your landlord. A judgment provides your landlord with the legal means necessary to pursue collection for the unpaid rent. If you present a defense in court and the landlord wins, he will receive a summary judgment, one that is based on the evidence. If you do not defend against breaking the lease, the court will issue a default judgment. No matter which type of judgment applies, your credit is negatively affected.
Credit File
The primary factors that go into calculating your credit score include payment history, credit-to-debt ratio, length-of-credit history, types of credit accounts and new credit accounts. Credit-reporting agencies compile the account information based on reports from lenders, landlords and other credit issuers. Other factors that potential lenders and landlords consider when evaluating your credit worthiness is the information listed in the public information sector of your report, such as judgments and bankruptcies. Potential landlords and mortgage lenders consider a judgment for breaking a lease agreement a strike against you.
Credit Ratings and Judgments
The presence of a judgment will negatively affect your credit rating, but breaking your lease likely affected your credit score before the landlord filed the lawsuit. Landlords who report payments to the credit bureaus would have reported your lease payments as delinquent, which impacts the payment history calculation of your score. Payment history factors into 35 percent of your overall score. According to the Fair Credit Reporting Act, you can have the delinquent entries removed after seven years, but the judgment can remain up to 20 years. Judgments affect your credit for as long as they are valid. Validity time frames vary by state.
Other Ramifications
If a landlord sues you for breaking the lease and wins, more than your credit can be affected. Judgments give creditors the right to garnish your wages, take money from your bank accounts and seize nonexempt property. These rights extend for the life of the judgment, giving the landlord time to wait until your financial status improves before attempting collection.
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