Falling behind on bills can happen to the best of us. Sometimes life throws an unexpected curveball at us and if we aren’t financially prepared, the consequences can have a long term affect on your financial stability.If you are wondering what is a credit score and how is it impacted by an eviction, we’re here to help! Let’s debunk this mystery so you can make smart financial choices to insure your future stability.
What is a Credit Score? | What Happens to Your Credit Score When You Get Evicted?
When we start a discussion about credit, it helps to know exactly what is a credit score! For most people a credit score is something that they only consider when it’s bad and they don’t know it! Being financially responsible also means having a firm grasp on these important points that outline and answer the question: what is a credit score?
What is a Credit Score
A credit score is a numerical value assigned to the level of credit worthiness a person has earned based on prior credit given, loan payment promptness, and debt to income ratios. Essentially your credit score is a numeric rating that is calculated based on a set standard analysis. It is a risk factor analysis. Credit lenders use your credit score to determine how much of a risk you are for non-payment. You can build your credit by making all payments in a timely manner and never borrowing more than you can financially sustain.
What Happens to Your Credit Score When You get Evicted?
Now, we’re looking at credit scores in relationship to evictions. Because your credit score is an essential part of the approval process for renting and buying homes (with a mortgage) it is important to learn about the consequences of non-payment and eventual eviction.
An eviction will stay on your credit report for seven years in most cases. It is public record during that time and any applications for credit or housing will show this eviction during an inquiry and report.
Future Access to Credit
With an eviction notice attached to your credit score you will likely have trouble accessing any new credit. Most lending agents like banks, credit card companies, and other housing lenders, will avoid clients who have had evictions served against them. Even if you eventually pay off the debt this “black mark” will remain on your score for seven years. That means in those seven years you will have trouble proving to other credit lenders that you can be trusted to pay back your debts.
In the US, more companies are doing a credit check before offering employment than ever before. Many companies do this to ensure they are hiring trustworthy and responsible employees, others do a credit score check to make sure that they do not have a liability on their hands. With an eviction notice served against you it can be difficult for employers to tell if you will be responsible to show up on time each day, it will also make them question your financial stability. Most employers do not want to hire employees that they fear may be pushed to great lengths to get money or merchandise. They don’t want to hire someone they fear might steal from them!
On top of the delinquent rent payments you may also run into high legal fees. Court costs and fines can be high in the cases of evictions. You might end up paying more in fees, fines, and lawyer costs than you would in just rent payments alone.
It is important to remember that when you enter into any agreement like a lease, rental agreement, or loan, you are prepared to pay the full amount owed. If not, you could run into some seriously financial roadblocks down the road. The inability to get another rental, morgtage for a new home, or even a job to help pay off your fine and fees. The financial impact on your future can be much greater than simply losing your current residence.