I have talked before about what can happen if you don’t pay your rent on time, and what it can mean for your credit history and how easily you can rent your next apartment or buy your next car. But some people are curious as to WHEN the landlord will actually charge them the late fees.
It varies between landlords when they decide to charge late fees, but technically, if you are even one day late, they can charge you a late fee.
Everyone has trouble from time to time making payments on something. It isn’t anything new, and that unfortunate phenomenon won’t be going away anytime in the near future.
Below, we are going to go through why apartments charge late fees, why they report late payments to the credit bureaus, and what you can do to improve your credit score while living in an apartment.
Why Do Apartments Report Late Rent?
So why do apartment complexes report late rent? What’s it to them?
Well, to start with, for a landlord to report you to the credit bureaus, they have to be signed up to be a “data furnisher” with one of the Big 3 credit reporting companies, Experian, Equifax, TransUnion. This means they have some software and rules to follow as it regards to reporting to the credit bureau. You can’t just be some random dude calling up the credit agency because you don’t like some guy you think owes you money. There are rules and guidelines for when and how they must report.
Apartment complexes will typically not report late rent payments unless the late payments were egregious. If the tenants owe a few thousand dollars and were incognito during the last couple of months, and made the landlord go through the whole eviction process, that person is more than likely going to be reported to the credit agencies.
Landlords want other landlords to know who a good renter is, and who is a bad renter, and this is an easy, efficient manner at doing just that. Also, any lenders people use to buy things like cars and houses are also going to want to know how good of a credit risk they are. The higher the score, the more likely that person will make good on their payments. A low score means that there is a documented track record of the person not paying their bills on time, or at all.
The larger the apartment complex, the higher the chance that they will be set up as a data provider with the credit companies. This allows them to report the good AND the bad. So, if you are renting an apartment and make all of your payments on time, this can reflect positively on your credit score as being a good risk to take.
When Do Apartments Report Late Rent?
As we said above, there are federal rules and guidelines for reporting late payments. One of these federal laws says that your landlord cannot report the late payment to the credit bureaus until the debt is at least 30 days old. This grace period is built in to allow people to get current on their debt.
However, a landlord CAN charge you late fees starting on Day 1 of when your rent was due. Some cities have restrictions on how much a landlord can charge for being late on the rent, but many places don’t have limits at all.
Remember, the late fees are put in place as an incentive to pay your rent on time, not as a cheap way to just get more money from the tenant. The landlord was happy in accepting just your normal rent payment as compensation, that is all they are looking for. The late fees are never large enough to compensate for all the time, money, and energy it takes to collect on late rent, it’s just used as an incentive for the tenant to pay their rent on time.
Should I Pay Off An Old Apartment Debt?
Any debt that you owe your landlord is more than likely going to be reported to a credit agency. If the landlord doesn’t report it directly, the people they hire as collection agents most definitely will as it is part of their job to do so.
These reports of chronic late or non-payment will stay on your record for 7 years. This is a long time to expunge those bad marks from your record and will make things harder when trying to rent another apartment, buy a car, or finance a house. All of these places are going to pull your credit score to see what history you have with paying your debts in full and on time.
If you DO have an outstanding debt with an apartment, it can absolutely benefit you by paying it off. You can make arrangements with the landlord to accept the payment of debt and write a letter asking for the debt to be removed from your credit score. If this can’t be done, it at least shows your future creditors that you recognized your previous debt and did what you could to take care of it. This is going to help you finance your next big purchase or rent another apartment.
Additionally, if the landlord pulls your credit history and sees that you have an outstanding debt with a couple of different places, they may be hesitant to rent from you because collections may be automatically taking some of your paycheck to pay them back.
The best thing that you can do is to make sure that you have no debt when you leave the apartment complex for the last time. Doing so may ensure that you have a tough time the next 7 years with anything finance or credit-related. Try and give yourself the easiest time possible with that and settle up your balance with your landlord.
Will Renting An Apartment Improve My Credit Score?
Just like not paying your rent will negatively affect your credit score, making payments on time every month can help your credit score.
The landlords that work with the credit agencies will report payments through software that the credit agency gives them. This allows them to report all payments made by tenants, both those who made them and those who didn’t.
If you have several years of rental history behind you, with no record of making late payments, that tells a potential creditor or landlord that you made all of your payments on time, and are a good risk to rent to or loan money to.
It’s the same concept as making your monthly bill payments on time or your car payment on time. The credit report is looking to see how much credit and debt you took on, and how responsible you were with it during that period. That is how lenders, creditors, and landlords base their decision to do business with you.
Apartment complexes can charge a tenant a late fee anytime after the due date the rent was due. Most complexes usually put a cap on what these fees are, as they are meant to be an incentive for the tenant to make their monthly payments on time, not a fundraising activity for the landlord.
Officially, a landlord cannot report past due rent to the credit agencies until the debt has been due for at least 30 days. However, if this happens, then that mark will stay on your credit report for the next 7 years, and it is much more difficult to damage your credit than it is to repair it.
We recommend paying your rent in full when you can. If you can’t, make sure to talk to your landlord to see if you can set something up. If they know you are willing to make an effort, there is a greater chance they won’t report you to the credit agency.
