Banking and Finance

What Is a Late Rent Payment & What Should I Do With It?

July 27, 2021

Did you know that twice as many renters fell behind on their rent payments during the pandemic than in previous years? While that was somewhat of a special situation, it’s still pretty common for renters to fall behind on rent every once in a while.

This means that if you think you might be late on a rent payment you're not alone. Late rent payments are a common occurrence, and while they can cause some financial stress, there are ways to handle them. 

In this article, we'll talk about what a late rent payment is and what you can do if you're struggling to make your rent on time. We'll also provide some tips for preventing late payments in the future. So whether you're already dealing with a late rent payment or just want to be prepared in case one happens, keep scrolling.

What Is Considered a Late Rent Payment?

So, when is rent considered late? Before you ask that question, it’s better to ask yourself, “when is rent due?” Always try to schedule automatic payments or bank transfers the day before your rent is due to avoid paying your rent late.

If you don’t have the funds to do that then we suggest speaking with your landlord to adjust your payment schedule. Regardless, you still need to know when your rent is due, right? This helps ensure you know when rent is, well, past due.

To understand late rent payments, you need to first understand that landlords and credit bureaus define “late” slightly differently.

Late Rent for Landlord

You’ll want to look at your rental contract to see when your landlord considers rent to be officially late or past due. Most leases state that rent is due on the first of the month, and late fees will begin accruing on the fifth. 

Of course, there are always exceptions to the rule. If you have a good relationship with your landlord and you're only a few days late, they may be willing to work with you. However, if you're more than a week late, they may start the eviction process.

Late Rent for Credit Bureaus

According to federal law, a landlord can only report a late payment after 30 days. So, if you pay before the thirtieth day, you shouldn't see any negative impact on your credit score. However, you might still have to pay a late fee to your landlord. 

Unfortunately, if you miss the 30-day deadline, your late payment will be reflected on your credit report. This can negatively impact your score and make it more difficult to get approved for loans in the future.

What Are the Penalties for Late Rent Payments?

Assuming you’ve received a late rent notice already, the most probable penalty is that you’ll incur a late fee for rent. However, as mentioned above, your landlord can legally start the eviction process after a certain period.

How late can you be on rent before eviction? Or, can you even get evicted for paying rent late? Yes, you can get evicted for not paying rent on time. And, as mentioned above, landlords are legally able to start the eviction process if you haven’t paid your rent after 30 days past the due date.

In most states, the first step is for the landlord to give you notice to pay rent or move out within a certain number of days. If you don't comply, the landlord can then file an eviction lawsuit against you. If the judge rules in favor of the landlord, you'll be given a deadline to move out. If you still don't leave by that date, the sheriff will come and physically remove you from the premises. 

Eviction is a serious issue, so if you're struggling to make rent, reach out to your landlord or a local housing assistance program. They may be able to help you avoid late payments and protect your credit score in the process.

Will Late Rent Payments Affect Your Credit Score?

We see this question floating around a lot. Does not paying rent affect your credit score? It can, yes. However, if you forgot to pay rent once then it’s unlikely that it’ll affect your score at all. This is because rent payments don’t automatically get reported to the three major credit bureaus.

Credit card payments, auto loan payments, student loan payments, and similar payments do show up on your credit report and impact your credit score. However, you have to request that your landlord report rent to the credit bureaus for those payments to show up on your credit score. 

However, if you’re way behind on rent and the account goes to collections then yes, late rent payments will show up on your credit report as a collections account. This can lower your credit score, making it more difficult to qualify for loans or credit cards in the future.

How long does unpaid rent stay on your credit report? It’s the same as any other negative mark on your credit report (such as a missed credit card payment) in that it will likely stay on your report for up to seven years. After seven years, it’ll disappear from your report and you’ll be able to start over (sort of) like new.

To learn more about how late rent payments affect your credit score, read our full guide Does Paying Rent Late Affect Your Credit Score?

What Should You Do If Your Rent is Late?

First, it’s important to know that there can be many acceptable reasons for late rent payments. Maybe your job hours got cut and you're struggling to make ends meet. Perhaps you had an emergency expense come up that you hadn't planned for. 

Whatever the reason, it's important to communicate effectively with your landlord as they’re the ones who have the authority to report late rent payments to the credit bureaus. You don’t want unpaid rent on your credit report, even if you simply forgot to pay rent once or twice.

Picture source

Use On-Time Payments to Build Your Credit Score

Paying rent is often seen as a grudge payment — it’s money that you have to fork over every month with nothing to show for it. However, rent can actually be used to help build your credit score. 

Rent reporting is a service offered by some third-party apps and platforms that are partnering with the credit bureaus like TransUnion and Equifax. These third-party companies are able to report tenants' rent payments to the major credit bureaus. As a result, on-time rent payments will now show up on your credit report just like any other bill. 

Overall, if you make on-time rental payments, rent reporting can be a great way to build up your credit score, especially if you don't have any other borrowing history. In addition, rent reporting can also help you to improve your rental history, which may come in handy when you're looking for a new place to live. 

Interested in starting to report your rent as a way to boost your credit score? Sign up here to get started!