How To Report Unpaid Rent to Credit Bureau: A Landlord’s Guide

By Ryan Squires

Dealing with delinquent tenants who don’t pay rent on time is one of the most difficult aspects of property management. Tracking down late rent is time-consuming, receiving payments can take months, and it might require a long legal battle.

Reporting these tenants to a credit bureau can help show other landlords that they’re inconsistent with rent payments and help them avoid future headaches. While this process is an option for some landlords, it’s complicated and not an option for everyone. In this blog, we’ll break down everything you need to know about how to report unpaid rent to credit bureaus and other ways landlords can attempt to collect unpaid rent.

How to Report Unpaid Rent to Credit Bureaus

Landlords can leverage credit reporting as a tool to encourage timely rent payments. However, direct reporting to credit bureaus is typically reserved for large landlords who process numerous rental payments monthly. Smaller landlords may find it challenging due to the need for a merchant account.

An alternative for smaller landlords is Experian’s RentBureau. This service allows landlords to automatically deduct rent from tenants’ bank accounts and report payment history to Experian. However, tenants must opt-in, and the service doesn’t cover other tenant behaviors like evictions or property damage.

Alternate Options to Collect Unpaid Rent

Reporting late rent payments to a credit bureau isn’t an option for every landlord, so what alternatives do you have? Here are a few options for landlords who need to collect unpaid rent.

Eviction 

Eviction is often the most effective way to recoup unpaid rent, but it can take the longest. The eviction process varies by state but generally involves filing a formal eviction notice with the court. If the tenant doesn’t vacate the property within a specified timeframe, a court order is issued, and law enforcement can remove the tenant.

Evictions are also typically reported to credit bureaus, which impacts a tenant’s credit score and demonstrates to other landlords that the tenant might not be reliable.

Collections Agencies 

Hiring a collections agency can be a viable option for recovering unpaid rent. These agencies specialize in debt collection and have the resources to pursue delinquent tenants. Keep in mind that there’s usually a fee associated with using a collections agency, and they typically receive a percentage of the recovered amount.

Rent Reporting Services 

Another avenue to explore is rent reporting. While not a direct collection method, it can incentivize tenants to pay rent on time. Some companies specialize in reporting rental payment history to credit bureaus.

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Consequences for Tenants

Reporting unpaid rent to a credit bureau can have significant consequences for tenants. A negative rental payment history can:

• Lower their credit score: This can impact their ability to secure loans, credit cards, or even housing.
• Make finding future housing difficult: Many landlords use credit reports as part of their tenant screening process.
• Result in increased rental costs: Tenants with poor credit may be required to pay higher security deposits or increased rent.

Tenants must understand the importance of timely rent payments and their potential impact on their financial well-being.

How TurboTenant Can Assist Landlords

Reporting unpaid rent to credit bureaus can be an effective tool for landlords to encourage timely rent payments and mitigate financial losses. However, it’s a complex process that might only be an option for some landlords. So, it’s essential to prioritize direct communication with tenants and explore alternative solutions.

TurboTenant offers multiple features designed to make rent payments easier. With TurboTenant, landlords and tenants can:

• Easily make online rent payments from any device.
• Automatically report on-time rent payments to build tenant credit.
• Distribute automatic rent receipts to tenants for accurate record-keeping.
• Send automatic rent reminders to reduce late payments.
• Set up autopay and eliminate late rent payments.

Sign up for a TurboTenant account today to streamline the rent collection process. All the rent collection features are free and give you a cost-effective way to battle late payments before you’re forced to consider reporting unpaid rent.

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