Your FICO credit score is a three-digit number that's determined by the data within your credit report. The score begins at 300 and can soar up to 850. Higher scores generally mean easier credit approvals and lower interest rates. Breaking an apartment lease can not only affect your score now, but it can potentially affect it for many years into the future.
A landlord may check your credit as part of the rental application process. However, rental payment information isn't generally reported to the credit bureaus unless there's a default on the lease. If you break the lease, the landlord may report the unpaid balance to the credit bureau. This is considered negative account information to have on your credit report. As part of your credit score, FICO considers your payment history. Defaulted accounts are included in this calculation and may negatively affect your credit score. How much your score is affected will depend upon the other data contained in your credit report.
Landlords are generally not in the business of collections, so unpaid debt from a broken rental agreement is often turned over to a collection agency. The goal of the agency is to collect the unpaid rental monies from the renter. As part of the collection process, the agency may place a collection account on your credit report. According to FICO, the very presence of a collection account on your credit report will usually lower your credit score. Also, even if you later pay the collection account off, this will not remove it from your credit report.
Depending upon how much you still owe under the broken lease agreement, the apartment management, or collection agency, may decide to sue you for the unpaid sum. If the lawsuit is successful, the court will issue a judgment against you for the amount owed. This judgment may permit the judgment owner to garnish a portion of your wages or seize money in your bank account. A judgment will also appear on your credit report as a public record, which will have a very negative affect on your credit, according to FICO.
Negative accounts, such as a broken lease agreement, will remain on your credit report for up to seven years. Any collection accounts or judgments associated with the debt can also remain on your credit report for up to seven years. Just as payment of a collection account will not remove it from your credit report, payment of the unpaid lease bill or judgment debt will not remove those items from your report either. These items will continue to adversely affect your credit for as long as they remain on the report. The older the accounts get, however, the less of an impact they will have on your credit score, according to FICO.