How Long Does Rental Collection Stay on Credit Report?
Rental collection is a common concern for many tenants and landlords alike. When a tenant fails to pay rent, the landlord may have to take legal action to recover the debt. This often leads to the question: how long does rental collection stay on credit report? Understanding this duration is crucial for both parties to plan their financial future and creditworthiness.
The Duration of Rental Collection on Credit Reports
Rental collection information can have a significant impact on a person’s credit score. According to the Fair Credit Reporting Act (FCRA), rental collection can stay on a credit report for up to seven years from the date of the first delinquency. However, the specific duration may vary depending on the type of collection account.
Types of Rental Collection Accounts
There are two types of rental collection accounts that can appear on a credit report: tradelines and charge-offs.
1.
Tradelines
Tradelines are accounts that have been reported to a credit bureau by a landlord. If a tenant fails to pay rent, the landlord may report the delinquency to a credit bureau as a tradeline. These accounts can remain on a credit report for up to seven years from the date of the first delinquency.
2.
Charge-offs
Charge-offs occur when a landlord writes off the debt as uncollectible and sells it to a collection agency. Once the debt is sold, the collection agency will report the charge-off to the credit bureaus. Charge-offs can also stay on a credit report for up to seven years from the date of the first delinquency.
Impact on Credit Score
The presence of rental collection on a credit report can negatively impact a person’s credit score. The impact depends on various factors, such as the severity of the delinquency, the overall credit history, and the presence of other negative items.
Strategies to Improve Credit Score
If you have rental collection on your credit report, there are several strategies you can use to improve your credit score:
1.
Pay Off the Debt
Paying off the debt can help remove the collection account from your credit report. Once the debt is paid, you can request the collection agency to report the account as “paid settled” or “paid as agreed.”
2.
Monitor Your Credit Report
Regularly monitor your credit report to ensure that the collection account is being reported accurately. If you find any errors, dispute them with the credit bureaus.
3.
Pay All Bills on Time
Maintain a good payment history by paying all your bills on time. This will help improve your credit score over time.
4.
Keep Credit Utilization Low
Keep your credit utilization low by not using too much of your available credit. This will demonstrate responsible credit management to lenders.
Conclusion
Understanding how long rental collection stays on credit report is essential for both tenants and landlords. By knowing the duration and impact of rental collection on credit scores, you can take appropriate steps to manage your financial and credit future.
