Finance

I never imagined that paying rent late could affect my credit score

Pay Dirt is Slate’s money advice column. I have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)

Dear Pai Dirt,

I live in a rental property managed by a fairly large local property management company in my small town of Portland, Oregon. I recently got a new job and due to changes in my pay dates and salary schedule (and no extra funds in the bank), I have reluctantly had to pay rent one day late for the last three consecutive months. I’m finally back on track (paid this month on time, and will be able to continue working further).

I just tried to accept a credit card offer that I was supposed to be pre-approved for, but was declined. The reason given is my credit score. I then checked my credit score online and found it had dropped from a good 672 to a bad 624, with the only negative mark on the screen being three late payments. I have been current on all other accounts with no other delinquencies for many years, so the drop must be due to my late rent. I had no idea that a property management company could or would report payments to the credit bureaus. Is this typical? Do I have grounds to ask them to stop applying? For context, in my city, landlords are required by law to give a four-day grace period for late rent payments (meaning they can’t charge late fees until the rent is five days late).

— I didn’t want to pay late

Dear, he didn’t want to be late,

I’m generally a fan of the various services that report rentals to the credit bureaus because it’s a great way for people to build a credit history without borrowing money. It is increasingly common for property management companies to offer services such as Credit Builder as a convenience to their tenants, although this is generally an optional service. Unfortunately, these services can do more harm than good if you’re late. But most of these services only report to one credit bureau. Request a free copy of your credit report from all three bureaus at iearlinecreditreport.com so you can get a clearer picture of where late payments should be removed.

Since you’ve been in the allowed grace period, it’s worth contacting your property management company and asking them to remove the late payments from your credit report. If you had no luck with them at first, you could write a goodwill letter explaining the situation and stating the grace period and your temporary suspension of payment. You can also ask to opt out of the credit reporting service when you talk to them. However, they still have the right to report late rent payments and bills in collections, but one day late is extreme. In the long run, the best thing you can do for your credit score is to pay your bills on time, every time – the more positive your credit history, the less three late payments will matter.

— Lilian

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