Will Your Credit Score be Affected if You Break Your Apartment Lease?

Find out how breaking your lease in New York City can affect you and your credit. Learn how your rent payments are reported and ways you can mitigate any damage done to your record. Get insider tips on what your options are and leave your apartment in good standing with your landlord.

Breaking a lease can be an unfortunate last resort in case of financial trouble, moving to a different city, caring for loved ones, or relocating with a partner. However, as landlords reserve the right to press eviction or other legal measures, the consequences can be severe. Landlords may be lenient for reasons such as compassion, but it's not always the case. In a severe scenario, unpaid debt or the unpaid month's rent can be transferred to a collection agency.

These events can harm your credit score, and in turn, your dependents, making it harder to access credit in the immediate future.

How Will It Affect My Credit Score?

Because all judgments are entered into the public records, breaking a lease can trigger a mark on your credit score, lowering it up to 50 points.

If this course of action is taken, judgments, evictions, and unpaid fees will negatively impact your credit score, making it more difficult to find a new apartment, get a loan or obtain a credit card.

Depending on the FICO model used to pull up your credit, your actions may cause your credit more damage or less.

What is a FICO Score?

A FICO Score is the most widely used credit score by lenders.

Over 90% of lenders are highly dependent on this score to understand and check your credit risk.

The score is made up of the following five factors:

Credit FactorPercentage of influence
Payment history35%
Amounts owed30%
Length of credit history15%
New credit10%
Credit mix10%

More accurately, it is a number that predicts the likelihood that you will pay back a loan in a timely fashion.

The number is calculated based on your credit reports with three credit bureaus – Equifax, Experian, and TransUnion.

The credit can also change when your data changes at these credit bureaus.

They do not determine credit approval or interest rate. That credit-granting decision is up to the lender, though it does help them make that decision.

The scores range anywhere from 300 to 850.

FICO uses these five credit ranges to rate you:

FICO Score Ranges and What They Mean
StatusScore Range
Exceptional800 and up
Very Good740 to 799
Good670 to 739
Fair580 to 669
Poor579 and below

Reducing debt, missing payments, and creating new credit accounts (among other factors) can all positively and negatively affect it.

Ultimately the FICO score makes the lending process efficient and fair. It applies the same set of standards to all borrowers.

Rent Payments Can Hurt or Help Your FICO Score

When FICO 9 was officially introduced in 2014, it included major changes you should know about if you consider breaking a lease.

In addition to medical collections and third-party collections, rental payment history is incorporated into your credit score calculation.

Rental payments are not typically reported to the credit bureaus; however, your landlord may participate in a program to report these.

If you have a limited credit history but are making rental payments on time, it may help to boost your credit rating.

Furthermore, if you are applying for a new apartment, it can only serve to shed a good light on you as an applicant.

Of course, if the opposite is true, it will hurt you.

Rent Reporting Services

There are many rent payment reporting services. Some charge a fee, while a couple of programs offer this service for free.

Typically, there is a set-up fee, along with monthly payments or transactional charges.

RentTrack, CreditMyRent, RocktheScore, eRentPayment, PayYourRent, and ClearNow offer lower or no set-up fees.

If your landlord is already signed up for an online rental payment system like RentCafe, chances are that your rental payments are already being reported to at least one of the bureaus.

Unpaid balances, including breaking a lease, being assessed damages after the fact, or money withheld, are commonly reported.

Credit bureaus, however, are finding that rent experience is one of the most difficult factors to track.

This is mostly due to the fact that the majority of landlords own small, 1-4 family unit properties and are highly unlikely to report it to the credit bureaus.

If you are suffering from poor credit, read our tips on How to Improve Your Credit.

How to Prevent the Negative Impacts of Breaking Your Lease?

Breaking a lease should be done with proper care and planning.

Many leases have the option of breaking your lease with notice but often come with fees and a loss of your security deposit.

Fear not. There are some ways to break your lease without penalty.

Subletting As an Alternative to Ditching Your Apartment

If it does not state that you are prohibited from subleasing in the written lease, then you can sublet with or without your landlord’s permission.

If your apartment is rent-stabilized, you have a right to sublet your apartment following procedure-which is to ask the consent of your landlord in writing.

Your landlord should give you a written response in a reasonable amount of time. Refusal should be accompanied by a reasonable explanation.

If your landlord does not respond, refuses to provide an explanation, or provides an explanation that does not merit a refusal, you can sublet the apartment anyway.

Make Sure Your Roommates, If Any, Agree

You should get the approval of any other roommates currently living with you.

Make sure all details are clear like rent payments, other non-rent costs when to do showings when they will meet roommates, rules, and any other important factors.

Get a Signed Written Agreement with Your Sublessee

You are taking a risk when you decide to sublet.

Since you are the one on the written lease, you will remain financially responsible for all rent and damages that might be unpaid.

Make sure a written agreement is made and all parties agree to the terms and conditions.

Ask Your Sublessee If They'd Be Interested in Renewing the Lease

You should ask the sublessee if they are also interested in sign a new lease once the sublease period is up, so you can give your landlord or roommates a heads up.

Having Someone Take Over the Lease

Again, re-reading your lease agreement and talking with your landlord first is essential.

You're Responsible for Finding a Qualified Tenant

It is up to you to find a qualified tenant who will want to sign on for the remaining months.

Check the applicant’s income, credit score, and criminal and rental history before presenting the new replacement to your landlord.

Make Sure You Won't Be Held Liable

Consult your landlord and check local laws to see if you will be responsible for rent payments if the new tenant defaults.

You are only off the hook if there is a specific clause releasing you in your assignment agreement with the prospective tenant.

Make sure this is included with your rental agreement when presenting it to your landlord.

Breaking Your Lease With Some Penalties

When it comes to walking away from your lease, you might be able to mitigate your full financial responsibility by allowing your landlord to rerent and find a new tenant for a new lease.

When trying this option, it's always best to approach your landlord well in advance and reread your lease agreement to make sure that this is a viable option with minimal repercussions.

Caveats For Rerenting

While this idea sounds ideal, remember that you are still on the hook for rent until your landlord finds a new tenant.

So, that means if they don't find anyone for two months, you will owe rent for those two months.

Second, your landlord may hold you responsible for any broker fees or even charge you for apartment turnover, which involves cleaning, painting, and repairing the apartment.

Basically, this is always done in between tenants, but it's another way for them to charge a fee just because the apartment was turned over ahead of schedule.

Lastly, your landlord may make you pay back any concessions they gave you when you first signed the lease.

That means if you got a free month of rent or free parking, they might make you pay it back.

Abandoning Your Lease

If you get a sublessee or a new tenant, you may be able to get your security deposit back.

However, abandoning your lease straight up will almost certainly result in the relinquishment of your deposit.

If you want to minimize bad blood with your landlord, you can offer an extra month or two of rent to help hold him or her over while they are looking for a new tenant.

Your landlord may not be open to this, but it's worth trying to reach a compromise with him or her for your record's sake.

If you are not able to complete any of the previously mentioned options, it may be time to strike up a deal with your landlord.

If affordability is suddenly an issue due to income loss, try to negotiate a lower rent with your landlord.

These things happen, and at the end of the day, it's sometimes more convenient for the landlord to have a tenant in place who is willing to pay something rather than a sudden vacancy.

Moreover, if extenuating circumstances result in your need to break your lease, such as moving back home to care for a sick relative or sudden job transferral, make sure you convey that to your landlord.

After all, they are still human, and they might be more understanding than you expect.

Can You Break the Lease If the Rental is Uninhabitable?

Sometimes the reason we need to move out and break our lease is not due to any fault of our own and might be the fault of a negligent or hostile landlord or property management company.

How an Apartment or House Can Be Uninhabitable

There are many reasons that might cause a person to move out of their rental.

Some of these reasons can be but are not limited to no water or hot water, no heat, vermin, and signs of vermin, friable asbestos on the premises, gas leakage, mold, exposure to lead, dilapidated building structure, floors, crumbling walls, or ceilings and roofs, flooding, and unsecured premises (susceptible to break-ins).

Any of these reasons would make it permissible for a tenant to vacate the premises and the lease.

Can You Break Your Lease If You Are Being Harassed?

Not only do tenants have the right to a secure and safe home with access to basic necessities such as heat and water, they also have the right to quiet enjoyment and freedom from harassment.

The harassment or disturbance doesn't need to be caused by the management company employees or the landlord.

These disturbances can come from your neighbors and even non-tenants who enter the premises.

Breach of your right to quiet enjoyment can include but is not limited to loud noise, pets, or parties, second-hand smoke, sexual harassment or assault, construction, trespassers, unlawful entry to your apartment by your landlord or staff (they can enter if it's an emergency), denying access to heat or water, or refusing to accept rent and serving of illegal eviction notices.

These breaches are a violation of your lease and your tenant's rights.

How to Break a Lease If Your Rental Becomes Impossible to Live in

In each of these cases, make sure you have documented photos and written complaints to your landlord or property management, as well as, the noted time frame in which you received no response or dismissive response.

Make Sure You Document Your Experience

You should also make notes of incidents of harassment by building staff or your landlord and the reporting of any incidents to them.

If there has been a break-in or assault, you should file a report with the local police.

Express Your Desire to Break Your Lease to Your Landlord

You should notify management or your landlord of your plans to either withhold rent or break the lease due to the mentioned circumstances and cite how this violates your lease agreement.

Get Legal Help

If the circumstances become overwhelming and you experience more hardship after making your intention to vacate your lease, you should contact an attorney for extra support.

The Takeaway on Breaking Your Lease

If done with enough forethought and consideration, breaking your lease will not damage your credit score.

The relationship you have with your landlord will play a major part in whether this process will go smoothly or not.

If you have proven yourself as a responsible tenant, your landlord will be more likely to cooperate and understand.

It is always a good idea to re-read your lease agreement and discuss the matter with your landlord to get a better idea of your options.

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Rachel McCray
About the author

Originally from Florida, Rachel McCray, a writer and content producer, is now based in New York. Rachel offers expertise in New York City neighborhoods relating to real estate and history. Rachel McCray graduated from Florida Atlantic University with a bachelor's degree in Communication and Media Studies.