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How do late fees on rent affect a credit score?

IvoryCadenza 385 129 April 11, 2012 at 07:45 PM
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My roommate and I share a 2 BR apartment. He pays $705 per month and I pay $500. Our rent is paid online. He forgot to pay his portion by the end of the month and we got a letter addressed to both of us to pay the remaining balance ($705) plus a $35 late charge. He has more than enough money, it was simply a case of forgetting. He has since paid his portion and the late fee. My question is will this affect my credit score? Obviously a credit agency isn't going to understand that he and I have an agreement on the side for him to pay X portion and me to pay Y portion of the rent, so it will look like we are both at fault. Any idea?

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#2
As I understand it, same with something like a utility bill, your only penalty is your late fee - until you get to the point of it getting charged off/going to collections, it doesn't positively(or negatively) alter your score.

I've been in the same position before on more than one occasion(mostly due to being out of town unexpectedly) and there is nothing reflecting a late from the company that owns my apartment complex on my credit report(s).
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#3
I would not worry about this coming up on a credit report. Typically the payment has to be at least 30 days late before it gets reported to a credit bureau and rental properties seldom report to the credit bureaus. That said if you apply for a mortgage and the lender send out a verification of rent to your landlord the late payment may be reflected there.
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#4
Quote from mavv View Post :
I would not worry about this coming up on a credit report. Typically the payment has to be at least 30 days late before it gets reported to a credit bureau and rental properties seldom report to the credit bureaus. That said if you apply for a mortgage and the lender send out a verification of rent to your landlord the late payment may be reflected there.
While you're right that in this situation, more than likely, nothing will get reported to the credit bureaus, a creditor can report a debt delinquent if it's one day late. An item under the "30 days late" category is an item that was anywhere from 1 - 30 days late. Items 31 - 60 days late go under the "60 days late" category and so on.
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#5
Quote from Brian1 View Post :
While you're right that in this situation, more than likely, nothing will get reported to the credit bureaus, a creditor can report a debt delinquent if it's one day late. An item under the "30 days late" category is an item that was anywhere from 1 - 30 days late. Items 31 - 60 days late go under the "60 days late" category and so on.
While you are correct that a creditor may report an account late with as little as one day late this is highly unlikely. The credit bureaus will consider an account as 30 days past due if it is between 30-59 days late, an account 60 days past due if it is 60-89 days late, etc.
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#6
Chances are that your landlord isn't going to file anything.

As a landlord myself I've had people pay late and as long as it's not a recurring problem and they apologize and pay it I am fine with it. I don't want to go through the hassle to file a report with them or something for someone who paid a week late.

Now if it's constantly happening OR if they just stop paying that is a different story!
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#7
I talked to the rental agency that manages the company and they said they don't report it to a credit bureau. In fact they even reversed the late fee since my roommate paid the day after, lucky for him.
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#8
Id be surprised if any rental agencies report late payments to credit bureaus at least not initially. I'm sure some do but its just not in their best interest in most cases as your still in possession of the item (rental) and can damage it in a act of spitefulness.
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#9
Quote from Brian1 View Post :
While you're right that in this situation, more than likely, nothing will get reported to the credit bureaus, a creditor can report a debt delinquent if it's one day late. An item under the "30 days late" category is an item that was anywhere from 1 - 30 days late. Items 31 - 60 days late go under the "60 days late" category and so on.
Rent isn't a debt. When you a sign a year long lease they aren't loaning you $12,000 at 0% and you pay that back.

No apartment complex in the world reports to a credit agency about a $35 late fee assuming you pay it. Most don't even report it to the agency until it gets sold off to a collections company.
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Last edited by harruin April 19, 2012 at 02:49 PM
#10
Here's the newest. As a landlord, I'm glad to have this as leverage:

http://www.mint.com/blog/credit-2...-02142011/

Google this text if the link doesn't work:

The credit reporting agency recently announced that they added millions of apartment rental accounts to their credit file database

or just google RentBureau for reporting standards.
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Last edited by Brattles April 20, 2012 at 05:41 AM
#11
While landlords do not customarily report to the credit bureaus, keep in mind that certain borrowers with limited credit may be asked to prove timely rental payments when applying for home financing to purchase a home.

I have a client with very limited credit and looking to purchase a home. FHA will do the loan but we need to add alternate credit. If he was over 30 days late on his rent this would have been a big issue in him obtaining financing. This is a rare scenario but it does occur.

Also, as far as defining "late" on a credit report, remember that a derogatory notation is for lates of 30 days or longer.
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