How Do Landlords Report Late Rent to Credit Reports?

Overview

Tenant Payments

Landlords have several options when it comes to tenants who have not paid their rent. The first step is to have clear rules laid out as to when rent is due and what procedures will be followed if rent is not paid. All tenants should be made aware of these rules and what steps the landlord will take if they fail to make their rent payments on time. There is a legal process that should be followed in these situations, which is usually determined by the type of lease the tenant is under.

Rent can either be completely unpaid, or partially unpaid. These charges often culminate under the term "added rent," which carries the same weight as unpaid rent but infers that the tenant still has that much rent left to pay, in addition to the current time frame. Any amount unpaid is usually seen as added rent for a few days before the landlord takes action--a grace period to receive the payment, which is often three to five days. After this, the landlord usually begins by sending a late-rent notice, a late notice form that indicates what fees the tenant has left unpaid, as per the lease agreement.

Eviction Steps

It is also advisable to make some kind of contact with the tenant, either by the phone or in person, to find out in more detail the circumstances of the unpaid rent. This is also an opportunity to mention that, on a specific date, the tenant's account will be transferred to an attorney's office and eviction proceedings will begin. The lease may even specify that tenants have to pay for the legal fees incurred in such an event.

After this, an official eviction notice is sent to the tenant, often combined with a legal letter from the attorney advising the tenant to pay the fees before the court date on which the eviction will become official. This is also the time that many landlords choose to notify their tenants that beyond the eviction proceedings, the debt they are incurring will badly influence their credit. The last step is usually to report the bad debt on the tenant's credit record by contacting a credit bureau.

Bad Debt Reporting

There are several schools of thought on how a landlord should report credit. Some believe that landlords should report credit every month or every six months, both as a instrument to remind tenants to pay on time and as a reward for good payment, since regular reports will have some positive influence on their credit score. Others believe landlords should only report bad debts when there is no possibility of receiving payment. Either way, the action is the same: credit bureaus must be contacted with information on the tenant's account and the debt. There are three primary credit bureaus (Trans Union, Equifax and Experian), but many smaller versions as well. While a landlord can contact these agencies directly, there are many services designed to help landlords report debts to all three at once for a small payment--usually around $5 a month for a continual report, or $10 to $15 dollars for a one-time report. Organizations such as the Landlord's Protection Agency have more information available on these services. Once the credit bureaus have been informed, the debt will show on the tenant's credit report for seven years.