Does an Eviction Affect Your Ability to Buy a House?

Can I Buy AΩ House With An Eviction

Does an Eviction Affect Your Ability to Buy a House?

While an eviction notice itself does not directly affect your ability to buy a home, the consequences of an eviction can indirectly impact your chances. It’s not the eviction that mortgage lenders see and care about. It’s the mark that unpaid rent, often a cause or result of eviction, leaves on your credit report.

Landlords can send your unpaid rent balance to a collection agency. This reality can lead to a collections account listed on your credit report, which undoubtedly lowers your credit score— and your credit score is a key metric assessed by lenders when considering you for a mortgage.

It’s vital to clarify that an eviction isn’t a mortgage death sentence. It merely presents a hurdle. With time and proactive credit improvement efforts, you can convince lenders that you’re credit-worthy.

What Is An Eviction

An eviction is a legal process in which a landlord removes a tenant from a rental property. Reasons for eviction often include failure to pay rent, violation of lease terms, or engagement in illegal activities. But remember, eviction isn’t an immediate, one-step process. It involves series of legal steps, and you’ll generally receive notices.

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How Evictions Work

Evictions follow a certain series of legal proceedings that strive to balance the rights of tenants and landlords. Here’s a basic rundown of how the eviction process typically works:

  1. Notice is Received: Initially, the tenant receives a notice from the landlord. This eviction notice might be due to unpaid rent, violation of lease terms, or illegal activities within the rented property. The notice usually gives the tenant a certain time window to correct the violation or leave the property to prevent further legal action.
  2. Filing of Eviction With Court: If the tenant either can’t or chooses not to comply with the notification, the landlord then files an eviction case with the local court.
  3. Court Hearing and Judgment: An eviction case means both the landlord and tenant have to appear before a judge. The judge hears the landlord’s grievances and the tenant’s defense, if any. If the judge adjudges the eviction as valid, they’ll issue an order of eviction.
  4. ** Issuance of Eviction by Law Enforcement:** Only a court officer or sheriff has the legal authority to evict someone, not the landlord. The tenant will be served with a notice notifying them when the eviction will take place, which gives them some time to move their belongings.
  5. Possession is Regained: Once the eviction is executed, the landlord regains possession of their property. Any remaining belongings left by the tenant can be disposed of or stored depending on local laws.
  6. Collection of Unpaid Rent: If evicted due to unpaid rent, the former tenant is still liable for it. The landlord can either hire a collection agency or sue in small claims court to recover this sum.

How Evictions Affect Your Credit Score

You might be wondering how an eviction can change your credit score. An eviction itself doesn’t show up on your credit report, which means it doesn’t directly affect your score. However, what happens after an eviction can hurt your score. Here’s how:

  • Lawsuits and Judgements: If your landlord takes you to court over an eviction and wins, you might owe them money. This is called a judgment. If a judgment is reported to credit bureaus, it can stay on your credit report for up to seven years and lower your credit score.
  • Collections– If you still owe money to your landlord after you’ve been evicted, they might give this debt to a collection agency. Collections can really harm your credit score and stay on your report for seven years.
  • Late Payments – If you rent reports to the credit bureaus, you may have late payments which will drop your credit score. 

When your credit score goes down, it can be harder to get approved for credit cards or loans, including a mortgage to buy a house.

How to Remove An Eviction From Your Credit Report

If an eviction has hurt your credit score, don’t worry. There are steps you can take to fix your credit report:

  1. Pay Off Outstanding Debt – If you still owe money to your old landlord or a collections agency, try to pay it off as fast as you can. When you pay off these debts, your credit report will be updated to show that you’ve paid, which can help your credit score.
  2. Request a Goodwill Deletion – After you’ve paid off your debt, you can write a goodwill letter to the landlord or collections agency. In this letter, you can explain why you were evicted and ask them to remove the negative information from your credit report out of kindness.
  3. Dispute Errors – If you find mistakes on your credit report, you should dispute them right away. You can write a letter to the credit bureau to tell them about the error. If they find that you were correct, the wrong information will be removed from your report.
  4. Start Building Good Credit – After you’ve removed the negative information, it’s time to start improving your credit score. You can do this by always paying your bills on time and using your credit card responsibly.

How Do I Avoid an Eviction on My Credit Report?

Taking steps to prevent an eviction from happening is the best way to keep your credit report clean. Here are some helpful tips:

  1. Pay Your Rent on Time – Always try to pay your rent when it’s due. If you think you might be late, talk to your landlord ahead of time. They might be willing to give you extra time to get the money.
  2. Follow the Lease Rules – Always follow the rules set out in your lease. This could be about having pets, smoking, or how many people can live with you. If you break these rules, your landlord could evict you.
  3. Communicate with Your Landlord – If you’re having problems that might lead to an eviction, speak to your landlord about them. They are people too and might understand your situation. You might be able to work together to avoid eviction.

How Long Does An Eviction Stay On Your Credit Report?

When it comes to evictions, the good thing is, the eviction itself doesn’t show up on your credit report. But if you didn’t pay your rent, the landlord could tell a collections agency. Now the collections will show up on your credit report and this can lower your credit score.

Collections stay on your credit report for a very long time – seven years to be exact! That’s seven years from the day the landlord said you didn’t pay your rent.

What about if your landlord took you to court?

 If the judge says you need to pay the landlord money, this will also show up on your report. This is called a judgement. Just like collections, a judgement stays on your credit report for seven years.

It’s a long time, but don’t worry. Over time, these things hurt your credit score less and less. And if you do good things with your credit during these seven years, you can help your score go up again.

Is Your Rental History on Your Credit Report?

Your rental history isn’t usually on your credit report. Your credit report shows if you borrowed money and if you paid it back on time. 

But, sometimes, your rental history can be on your credit report. This happens if your landlord reports your rent payments to a credit bureau. Some landlords do this to encourage tenants to pay on time. If you pay your rent on time and your landlord reports it, this can help your credit score.

On the other hand, if your unpaid rent gets sent to a collection agency, this will show up on your credit report. If your landlord sends you to court, this can also show up on your report. Both of these things can lower your credit score.

How to Buy A House With An Eviction

Even if you’ve faced eviction in the past, don’t lose hope of owning a home. Follow these steps:

1. Clear Your Debts – If you’re left with unpaid debts after your eviction, try to settle these as soon as possible. Paying off your debts shows lenders that you’re getting back on track.

2. Polish Your Credit Score – After settling your debts, concentrate on raising your credit score. Pay your current bills on time and keep your credit card balances low. These steps can slowly strengthen your credit score again.

3. Start Saving – Buying a house often requires a down payment. The money you save also proves that you’re ready to manage financial responsibilities like mortgage payments.

4. Regular Income – Try to show a regular income. This proves that you can make payments on time.

5. FHA Loans – Consider loans by Federal Housing Administration (FHA). These loans often accept folks with lower credit scores and can work well for those facing eviction.

6. Be Honest – When talking with lenders, be honest about past evictions and explain how you’ve improved your financial habits. They’ll appreciate your honesty and progress.

7. Professional Help – Consider working with a credit counselor or financial advisor. They offer valuable advice and help chart a way forward.

About The Author

Channing Moore

Channing is the owner of Bayou Mortgage. He is passionate about empowering people through education and training to own a home. In his spare time you can catch him at church, reading a book or working on his latest project.

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