How a Breached Lease Can Affect Your Credit
There are a variety of reasons why someone would choose to terminate their lease early, including the death of a loved one, money problems, losing a roommate, and even being evicted for a variety of reasons.
When you sign your lease for a set number of months agreed upon with the apartment community, you are guaranteeing that the property will earn income for the duration of your entire lease. If you terminate your lease early, that means lost income for the apartment community, which is why they are so strict about staying through the end of your lease and not terminating early.
Most apartment communities have begun to include a clause in their lease to protect themselves in case a tenant breaks their lease early. Rather than try to prevent tenants from terminating their lease early, apartment communities will allow tenants to terminate their lease as long as they pay up front. For example, if a tenant terminates their lease before the date agreed to in the lease, they may be required to pay a breach of lease fee, any special offers they received back into the community, as well as a written notice to vacate the community. and pay the rent owed for those days during the notice to vacate (NTV).
If you pay all of these fees when you move out of the community, most servicers will consider your lease to be paid in full and allow you to move without damaging your credit. If you do not pay the fees associated with your early termination, in most cases you will be sent to collection. A collection agency will attempt to collect the outstanding balance owed on behalf of the apartment communities. A collection agency has the authority to give you some sort of grace period before any damage is done to your credit, but if you don’t pay the balance owed to the apartment community within a period of about 45 days, then you would be subject to to a hit on your credit score. In most apartment communities, during the initial screening process, owing an outstanding balance to another apartment community is an instant “rejected application.” You could have a hard time finding a place to move to if this is a situation you have encountered.
If your lease allows an early termination on the pretext that you pay a fee, you should consider paying it to avoid damage to your credit. If you don’t pay the fee, you’ll only have yourself to blame when you try to find another community that will accept your rental application.