How Breaking a Lease Can Affect Your CreditIf you're breaking a lease, here's what you can expect to happen to your credit report.

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If you’re thinking about leaving your apartment before your rental term is up, you might be wondering, “Does breaking a lease affect your credit?” Under certain circumstances, breaking a lease could affect your credit score, which might impact your ability to get a good personal loan or other financial products. If you’re thinking about breaking your apartment lease, consider the ramifications.

Does Breaking Your Lease Hurt Your Credit?

An apartment lease is not a mortgage, so your landlord doesn’t report payment activity to the credit bureaus. But if you break your lease, that can trigger a mark on your credit history, much like a delinquent loan would. But does breaking a lease hurt your credit score? Here’s how it might affect your credit history:

  • Small claims court: Much like during an eviction, your landlord might hand the matter over to an attorney, who could file a lawsuit for a judgment to collect what you owe. This could affect your credit score because all judgments are entered into public record.
  • Collection agency: If you don’t resolve the balance you owe on the lease, your landlord might report the unsettled debt to a collection agency — and the agency could notify the credit bureaus, which would negatively impact your credit report.
  • Renting another place: Landlords often conduct credit checks on potential renters, and they can legally refuse to rent to applicants who have a history of unpaid debts. If you broke your lease and it appears on your credit report as an unsettled debt, you could have trouble renting another apartment.

Find Out: 7 Surprising Ways You’re Hurting Your Credit Score

How to Get Out of a Lease Without Harming Your Credit

Sometimes, circumstances require you to break a lease. Here are five ways to do it while minimizing the possibility of hurting your credit score:

1. Talk to Your Landlord

If you explain the reason you’re breaking the lease with your landlord, he might understand your circumstances and not penalize you. If you’ve been a good tenant and get along with him, it’s worth a try.

2. Read the Agreement

Before you break your lease, read your contract — you need to know your rights. Your contract might have a clause in it requiring you to give a couple months’ advance notice that you want to leave or requiring that you find someone to sublet the place.

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3. Find a New Renter

Some landlords will let tenants out of leases early if they find someone to rent the place. You can find someone to sublet or take over your current lease, but remember: You’ll remain responsible for any damage to the apartment or rent that’s not paid.

You can also find someone to sign a new lease agreement and pay his own security deposit. Many times, this type of search becomes the responsibility of the landlord, so it might be wise to save your landlord some work — and keep yourself in his good graces, which will help if you need to use him as a reference at some point — and find someone to sublet yourself.

4. Consider a Termination Offer

Your lease likely contains a termination offer, which could entail anything from paying a few months’ rent to giving up your security deposit in exchange for breaking your lease. If you talk to your landlord, he might reduce the fees or agree to return your security deposit.

5. Get It in Writing

It’s always a good idea to get any legal agreements in writing. Communicate with your landlord via email, and if you do need to talk to him, take notes about the conversation; then write him an email summarizing what was said and ask him to confirm receipt.

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