How To Report Bad Tenants To Credit Bureaus

Why It's Important to Report

Unreliable, destructive tenants are a massive thorn in the side of many landlords. In some of the worst cases, you must chase down former tenants for past-due rent or payment for damages to your property. In these moments, it is frustrating and upsetting to think that their rental history did not indicate such costly and problematic issues. While property management can typically be considered a sort of competition between landlords, there are quite a few ways landlords can and do help each other succeed. One way that landlords can make other landlords' lives easier is to report their bad tenants to a national credit bureau, such as TransUnion, Equifax, or Experian.

But how do you go about reporting bad tenants? Can you do this by simply filling out a form online or mailing some documents? Unfortunately, it's not that quick or that simple. However, if it is essential to you that you report serious issues with a tenant, then it is possible to ensure that bad tenants have to carry that reputation with them. If you've managed to eliminate a problem tenant, you might not immediately consider reporting them to the big three credit bureaus. After all, you have finally washed your hands of them and can proceed with finding more suitable tenants. Even if you lost money, why would you want to spend more time dealing with the problematic former tenants again?

Ultimately, you would want to report bad tenants to credit bureaus to ensure they cannot easily cause the same distress to another landlord without warning. While it is true that you might be able to get the money you are owed by hiring a collection agency or informing the tenant that you will be reporting them, it is difficult to get results in most cases. The responsibility for doing this lies in the fact that irresponsible tenants can be influenced by their poor behavior, as shown in your report.

Method #1: Multi-Property Landlords

This first method is for landlords who are managing and accepting payments on a lot of rental properties. The specific requirements of how many properties or payments must be accepted regularly vary from one credit bureau to another. Still, TransUnion requires at least 100 subscription accounts before you can report bad tenant behavior. For many credit bureaus, regular reporting of timely payments is the only way to ensure that your reports are attached when payments are not timely. If you have been reporting irregularly, you must provide more detailed information about what is overdue you and why. You'll need to subscribe to their service to report in either of these cases. Regardless of which bureau you want to report to or which method of reporting you are using, you will need to set up an account with the bureau in question to regularly report payment history from your tenants.

To do this, you can visit the websites of any of the bureaus that directly include rental payments in their credit score: Experian, Equifax, and TransUnion. Once you have an account, try to report regularly or use their recommended rent payment services to have everything automatically reported whenever a tenant pays. This method is becoming increasingly common and can benefit you and the tenant significantly. You will know that the tenant's payments are secure and on time. Additionally, the tenant is more likely to pay on time so that late payments do not affect their credit score. The tenant has the bonus of knowing that paying on time can help improve their credit score and help them buy a house or get a car loan in the future.

Method #2: Landlords with fewer properties

If you have less than 500 units, you can use Experian's Rent Bureau service to manage payments and ensure they are part of the tenant's payment history. When you and your tenant agree to use this service, rental payments are transferred directly from the tenant's bank account to yours. Of course, there are limitations even with this type of service. 

Method #3: Civil Judgments

After you complete an eviction or a tenant leaves without paying rent that they owe you, you can sue the tenant in a civil court case for the money that they owe you. Even after evicting a tenant, this is often the only way to collect the money. If you win the case, this civil judgment will become a public record, and the record will eventually trickle down to the credit bureaus within a few months. A monetary judgment decided in civil court can take as much as 100 points off the tenant's credit score, and the report will remain on their account for seven years. The next Landlord who comes across a tenant with this severe judgment on their credit report will likely think very carefully before renting to them.

Method #4: Collection Agencies

For most small to mid-scale landlords or property managers, the previous three methods might not be the easiest to accomplish. After all, you have limited resources, and we understand that. In cases where you cannot afford the time nor expenses to take on a new court case or pay for a credit reporting subscription program, you can outsource the debt that a previous tenant owes you to a collection agency instead.

When you hire a collection agency, you hire them to chase down late rental payments and any other eviction or damage-related debt that a tenant might owe you. The collection agency can report this to the three major credit bureaus if a tenant won't pay. Collection agency filings result in a negative hit to the tenant's credit score, and future landlords will be wary of this black mark on their record.

Your Responsibilities When Reporting

Regardless of your method, be sure that delinquent tenants are reported for their problematic behavior; you will want to take these essential precautions.

- Always ensure you have undeniable proof that your tenant owns the payments or debt you are reporting.- Tenants must be notified within thirty days of your submitting a report about their payments, whether that report is positive or negative.- Be sure to update the bureaus when the tenant's debt is paid. If you hire a collection agency to handle the debt, they will be responsible.- Keep in mind that reporting payments may incur a small fee. If your tenant is willing, you can split this cost with them.

Credit Reporting: Your Choice to MakeWhether or not you want to report bad tenants to national credit database providers, you should consider it an option if you ever need it. If you came across a tenant with a seemingly clean payment history only to find out later that they had frequently been late with payments, wouldn't you have wanted their former Landlord to report this? Checking credit scores and credit reports can be a big part of tenant selection; help other landlords ensure they are not trusting the wrong tenants by reporting bad behavior (and good behavior!) as regularly as possible. Using a subscription service that reports all payments as good or bad can be an excellent way to entice tenants to want to enroll in such a program. It can help raise their credit score if they pay on time and give them peace of mind.