Breaking a Lease: What It Means for You and Your Credit
Whenever you rent a home or apartment, you usually sign a lease agreement to pay rent for a period of time. But sometimes in case of unexpected mishaps such as job loss, relocation, marriage, or divorce, you can get forced to move earlier than expected and if you have you have a lease in such case? Can you break your lease and if so how will it impact your credit?
What Happens When You End a Lease Early
Your lease agreement covers the consequences of terminating the lease before it expires. Commonly the agreement may include things like giving advance notice, paying an early termination fee, or forfeiting your security deposit so whatever terms are spelled out, you simply follow the listed procedures.
However, in case if your agreement doesn’t specify the consequences of breaking the lease, state laws will determine what happens next.
In many states, landlords must find a new tenant to reduce their financial loss which can be pretty quick, and in this case you’ll only owe rent for a short period. BUT If the landlord can’t secure a new tenant you will still be responsible for several months of rent. If you don’t pay them, you could face:
- Difficulty renting in the future: Landlords check your rental history or might contact former landlords. If they learn that you broke a lease, they might hesitate to rent to you.
- Debt collections: If you owe rent, your landlord might send the debt to a collection agency. Which in the worst case can even lead to lawsuits.
- Possible legal action: Your landlord may sue for unpaid rent. If the court rules against you, you might owe rent plus court fees.
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How Breaking a Lease Can Affect Your Credit
If you manage to settle all outstanding rent and fees before leaving, your credit score won’t be affected. Problems arise only if you leave with unpaid debt.
Mistakes can happen like miscommunication between you and your landlord might still result in a collection account. To protect yourself, review your lease, settle all debts, and keep proof of payments.
Legal Reasons You Might Be Able to Break a Lease
Depending on your state or city, you might be legally allowed to end a lease early without penalties:
- Uninhabitable property: If things like plumbing, heat, or electricity don’t work or incase of severe damage or infestation, you may legally leave.
- Breach of quiet enjoyment: If your landlord harasses you, enters without permission, or another tenant causes constant disturbances, you may terminate the lease.
- Active military duty: Under federal law, active duty service members can end a lease if deployed or relocated.
- Victims of abuse or harassment: Many states allow victims of domestic violence, stalking, or sexual assault to break a lease early.
- Termination clause in the lease: Some leases outline specific early exit options.
Protecting Your Credit After Breaking a Lease
It’s entirely possible to break a lease and keep your credit intact — as long as you handle the process responsibly. Read your lease carefully, talk to your landlord early, and pay any remaining balances before moving out.
A few months after leaving, check your credit report to ensure no collection accounts or errors have been added. Keeping detailed records will help you dispute any mistakes. For peace of mind, you can also enroll in credit monitoring to catch any issues quickly.
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