Does Breaking a Lease Affect Your Credit Score?

Article Summary:

Breaking a lease agreement doesn’t have to hurt your credit score, and the lease itself may tell you how to break it early without negative consequences. It’s important to read through your lease thoroughly to understand the terms, as cars, apartments, and other properties will contain different language depending on the lease. Refusing to pay rent you owe or failing to make lease payments can cause problems on your credit history. But there are ways you can break your lease without hurting your credit score, including legally justifiable circumstances, subletting, and rent reporting services.

Breaking a lease can be a scary thing, conjuring up images of paperwork, fees, arguments with your landlord, and even lawsuits, not to mention the potential effect it can have on your credit score. Plans can change at a moment’s notice, and sometimes you have to move on before your lease officially ends.

Thankfully, although breaking a lease can affect your credit, it doesn’t have to. Paying your remaining rent, subletting, and other steps can help your credit report remain in good standing. If you can iron out an agreement with your landlord and break your lease without any unpaid fees, you can walk away with your credit in good standing.

What should I do if I need to break my lease?

Having open communication with your landlord or property management company is important when it comes to breaking your lease. You may be able to come to an agreement, which might involve paying an early termination fee or forfeiting your security deposit, that will allow you to walk away without any lasting damage to your credit report. A landlord might also charge you until the unit has been rented out to a new tenant.

Providing your landlord with as much notice as possible will allow the two of you to work together to find the best solution. Regardless of whether you come to an agreement, it is likely you will have to at least pay some sort of fee should you need to terminate your lease, if your situation isn’t due to a reason specified by the laws of your state.

Tips for breaking an apartment or home lease

These situation-specific tips can help you avoid problems when you have to break an apartment lease:

  • If you are being abused by someone in your home, tell your landlord that you have a domestic violence situation. Be direct that you fear for your life, too. Most states in the union have laws protecting domestic violence survivors from penalties related to breaking a lease agreement.
  • If your landlord is refusing to repair urgent items, document everything and cite a breach of contract. Your rental agreement goes both ways. Your landlord has a responsibility to keep your home safe and livable. If you want to keep your apartment, laws in some states allow you to withhold rent until repairs are made. However, if you live in a state where this is not permitted, or if keeping your apartment doesn’t interest you, you can also hire an attorney and request an early termination due to the contract breach.
  • Check for a subletting clause. In many cases, you can avoid breaking your lease by subleasing your apartment to another person who wants to live there instead of you. In this case, the rent the subletter pays offsets the income loss the landlord would suffer otherwise.
  • If your landlord is someone you know, then you may be able to ask for the landlord’s permission to break your lease without having to rely on a special circumstance. Offering to help find a replacement tenant or to pay a small fee can make permission more likely.
Breaking a lease does not have to hurt your credit, especially if you do it through legal means. Landlords who agree to let tenants break lease agreements cannot legally turn around and put a strike against their records. Credit bureaus only record negative marks if you don’t pay rent and have a rent-reporting apartment.

What happens if I break my lease and don’t pay?

There are several potential issues you can run into if you break your lease agreement without paying. If you are behind on rental payments, or unable to pay everything you owe, the outstanding amount could be sent to a collection agency, which will likely appear on your credit report. Although landlords themselves might not report unpaid rent to credit bureaus, collection agencies typically do.

Your landlord could also sue you for what you owe. A landlord can file a civil lawsuit to force you to pay off the remaining balance on your lease. The court can garnish your wages, seize your assets, and levy your bank accounts in order to satisfy the outstanding debt.

Read over your lease agreement carefully before you decide to break it. It will outline what you owe and how much notice your landlord needs before your move-out date.

Pro tip — Collection accounts stay on your credit report for up to seven years and can affect your credit score.

Does breaking a lease affect buying a home?

If you want to break your lease early because you are buying a home, you will likely have to go through the same steps as you would if you were breaking your lease for any other reason. It could still hurt your credit score, and your landlord might require you to pay the remaining rent you owe. Your rental history will also be negatively affected, which might hurt your ability to rent from future landlords.

Professionals’ tip — Some leases have what’s called a home buying clause, which allows you to terminate your lease early if you’ve purchased a new home, provided you give your landlord advance notice.

Does breaking a car lease hurt your credit?

As long as you pay the full amount you owe, breaking a car lease will not hurt your credit. Each time you make the monthly lease payment on your car, the dealership reports it to credit bureaus. Because your credit history accounts for 35% of your credit score, if you decide to end your lease early, it’s important to make your final payment on time.

Quick tip — Some lenders allow you to continue making monthly payments after you’ve turned the car in until the lease term expires.

How does breaking an apartment or home lease affect your credit?

There is some great news for people who are worried about breaking a lease early. Breaking a lease will not show up on your credit report or hurt your credit score in any way. It’s not a derogatory mark.

It can take years to improve your credit, so this is a huge relief for many renters. As long as you pay all the rental payments you have due, getting out of your lease will not affect anything. This is why it’s possible to break a lease and still get approved as a new tenant in a high-demand area.

Quick tip — It’s never a bad idea to ask your property management company or landlord for the terms of breaking your lease early. In many cases, a procedure will be in place that ensures leases can be broken without harm to any parties involved.

However, this doesn’t mean that you can just bail on rent payments and assume that your credit score will not be harmed. Like with all other late or unpaid debt, a late rent payment can hurt your credit score. This is particularly true with apartments that use rent reporting services.

Pro tip — If you are considering breaking a lease as a result of being unable to pay your current rent, talk to your landlord. Believe it or not, a landlord may be willing to put together a payment plan or find a way to get a new renter to take on your financial burden.

What happens if you break a lease during COVID?

Although there were nationwide moratoriums on evictions during the COVID-19 pandemic, many of those have now expired. These moratoriums also barred landlords from raising rents for tenants and prohibited late fees for overdue rent. Because these protections are no longer in effect, breaking a lease during COVID is now much the same as it is during any other time.

However, certain localities do still have COVID protections in place, so you can consult local laws and organizations, including rent boards, tenants’ unions, or tenants’ rights organizations, for guidance on how to take advantage of these.

What if you need to break a lease due to military obligations?

Breaking a lease is a part of life when you’re in the military — even if landlords don’t like it. If you can prove that you are an active duty military member, then landlords do not have a choice. They must grant you permission to break a lease.

The Servicemembers Civil Relief Act gives you a way out if you are going to be moving due to active military duty for at least 90 days. The easiest way to obtain proof of your status is through the Defense Manpower Data Center’s SCRA website. If you do not have an account on the site, contact you commanding officer or assigned supervisor for help.

How do I break my lease without hurting my credit?

If you have to break your lease agreement, there are some ways you can do so without hurting your credit. Throughout the process of breaking your lease, it’s important you don’t have any unpaid debt to your landlord, which can lead to legal action.

How soon ahead should you tell your landlord that you want to break the lease?

In most states, you will need to give your landlord at least one month before you leave. Most rental agreements will have a clause that shows how much advance notice you must provide.

Legally justifiable circumstances

Landlord-tenant law varies from state to state, so you’ll need to research the applicable laws in your state to know what circumstances justify breaking your lease there. If you live in the state of Washington, that state’s Landlord-Tenant Act lists four circumstances under which you can break your lease. These reasons are:

  1. A call to military service.
  2. As a response to a repair concern that the landlord isn’t taking action to fix within a specific time frame.
  3. Protections for domestic violence survivors, stalking or sexual assault, or harassment by a landlord or landlord’s agent.
  4. The landlord fails to file an eviction notice against a neighbor who threatens the tenant with a deadly weapon resulting in arrest, or the landlord threatens the tenant with a deadly weapon resulting in arrest.

Although there are a myriad of other reasons why a tenant might need to break a lease, these four are the only ones covered under the Landlord-Tenant Act. Applicable statutes in your state may permit breaking your lease under similar circumstances, but you’ll need to research this or speak to a legal professional.


Subletting entails finding a new tenant to rent the property, with your name remaining on the apartment lease. This allows you to move out without technically breaking the lease.

You’ll need to make sure subletting is legal where you live, and that your landlord agrees to the sublet. It’s also important to confirm that the replacement tenant subletting from you is reliable and will make rent payments on time. Since your name is still on the lease, it’s your responsibility to make sure rent is paid on time.

Buying out your lease

Let’s say that you have a great offer for a dream job halfway across the country. If you are worried about being unable to wait for that agreement, it’s OK to offer a few or several months’ rent to your landlord to wrap up your lease payments.

So, yes, you might be able to buy your way out of your lease, depending on the terms of the agreement. Although this can vary, it’s common to pay one to two months’ rent, in addition to an early termination penalty. You might also have to give up your security deposit. However, this can keep you from having any unsettled debt on file.

Note the difference — Paying (or “buying out”) a lease when you have an apartment contract is not the same as buying your car after you lease it. Buying out an apartment lease doesn’t buy you anything but freedom to leave without negative repercussions.

Rent-reporting services

These services report your rent payments to credit bureaus. If you have rent reporting in place, breaking your lease or paying rent late can hurt your credit scores. However, if you and your landlord can come to a mutual agreement to end the lease early, it won’t receive a negative mark from the rent-reporting service.

Additionally, if you initiated the rent-reporting service, you may be able to cancel it without any late payments being reported.


If you can’t pay everything you owe at the time you break your lease, you could use a personal loan to cover your unpaid rent. A personal loan even has the potential to help your credit if your rent payments are reported to credit bureaus because it will allow you to continue paying your remaining rent.

Helpful tip — Before you float a loan, realize you may have debt-free alternatives, depending on your situation. If a major life change has left you unable to pay rent, call 211, visit, or go to your local social services department to see if you qualify for assistance. They may be able to help you with rent money or legal assistance.

Monitoring your credit report

Staying up to date on your credit reports, credit scores, and credit history after breaking your lease can help you stay aware of the ways in which it’s been affected. After a few months, you should be able to see the effect, if any, that it’s had on your credit.

Good-credit tip — The Fair Credit Reporting Act states that all consumers have access to each credit bureau’s report once a year for free. For more frequent or more detailed tracking of your credit file, consider commercial credit monitoring.

How to break your lease

Although breaking your lease can be intimidating, there are steps you can take to ensure the process goes as smoothly as possible. You will likely have to pay some sort of fee to your landlord, but there are ways to minimize the penalty for a broken lease. And it is possible to break your lease with minimal harm to your credit score.

  1. Document communication with your landlord: Keeping thorough documentation is a good way to protect yourself should something negative show up on your credit report that you will need to dispute. This can also help put you and your landlord on the same page, as you will both be able to see your past communication in writing.
  2. Document the condition of your unit when you move in and move out: This can help protect you against wrongful damage charges. You can request to do a walk-through of the unit with your landlord to make sure you are both in agreement about its condition and what may need repair. Documentation of any preexisting damage can also come in handy when it’s time to move out.
  3. Seek legal advice: If you’re concerned your landlord might be trying to take advantage of you, it could be a good idea to seek legal advice. Tenants have certain protections and courses of action they can take if they believe their landlord has acted illegally.


How does breaking a lease affect your rental history?

This depends on the way you broke it. If you broke your lease as a result of domestic violence or a breach of contract on your landlord’s side, then it may be noted as part of your rental history. However, the notation should not be a “bad” one, since it shows that you tried to do everything in good faith.

If your lease got broken as a result of unpaid rent and resulted in a court case, then you may have a negative mark on your rental history. Every payment that is more than 30 days late can stay on your payment-history report for seven years.

Does breaking a lease affect buying a home?

Because breaking your lease is not actually a matter of credit scoring, it usually will not harm your chances of buying a home. As long as you paid everything that you needed to pay to quit the lease, your payment activity will not be counted against you.

If you break your lease in any way that damages your credit score, such as by skipping town with months to go on a lease (say), that will make a home loan harder to obtain.

When you break a lease, do you have to pay the remaining rent?

If you want to break a lease for any reason that is not protected by law, then you are probably going to be responsible for the remaining rent.

Prudent advice — If you make a point of reading and understanding rental contracts when you first sign them, you can avoid unpleasant surprises if you have to break your lease. Even if you’re in a hurry, realize that signing legal documents you don’t fully understand can come back to bite you.

When they need to break a lease and don’t have a legally protected way around paying rent for the remaining lease term, many people choose to use a personal loan to meet their contractual obligation to their landlords. Others try to work out a rent payment plan to keep from having to pay the remaining rent all at once. Either approach can protect your credit history, meaning your broken lease won’t turn into a bad mark on your credit report. This means, among other things, that it won’t hurt your chances of getting a home loan.

What happens if you break a lease during COVID?

In the past, breaking a lease during COVID was legally protected as an unforeseen circumstance — either by actual laws passed in response to the pandemic, by executive orders authorized by emergency-powers statutes, or by orders of public health (or other government) officials that went unchallenged or were affirmed by courts. This meant that most people were able to break their leases without penalties as long as they followed local laws.

However, most (if not all) eviction moratoriums and protections have since been repealed (or overturned by courts). So, if you want to break your lease, you are ultimately responsible for checking out the legality of doing so and paying the fees you need to pay.

What happens if I break my lease and don’t pay?

If you break your lease and refuse to pay your landlord for the months of rent you owe, you can hurt your credit. It will register as a late payment. The later it gets, the more likely it is that you will get a charge-off on your record. These negative marks will stay for as long as seven years, making it hard to get a new apartment later on.

Key takeaways

  • A lease agreement, also called a rental agreement in the case of apartments, is a legally binding contract. To break it without negative consequences, you must do so in a legal manner.
  • Always read and fully understand contracts and other legal documents before you sign them.
  • Laws governing lease agreements vary by state. In most, victims of domestic violence may break a lease more easily than other tenants.
  • Federal law allows active-duty military who are being deployed to a new area to break their leases more easily.
  • Breaking a lease agreement doesn’t have to harm your credit score, and the lease itself can provide steps as to what to do if you end up breaking your lease.
  • While breaking your lease will not cause damage to your credit report, refusing to pay the money owed will.
  • Not paying rent debt you owe can cause derogatory marks like collections and late payment.
  • If you are behind on rental payments, or unable to pay everything you owe, the outstanding amount could be sent to a collection agency, which will likely appear on your credit report. Your landlord could also sue you for what you owe.
  • Your landlord may have the right to ask you to pay your way out of your lease agreement, which means that you may owe money to the landlord for upcoming months of rent.
  • As long as you pay the full amount you owe, breaking a car lease will not hurt your credit. Some lenders even allow you to continue making monthly payments after you’ve turned the car in until the lease term expires.
  • Landlord-tenant laws vary by state. Washington’s Landlord-Tenant Act lists four legally-protected circumstances under which you can break your lease. Check the laws in your state for similar allowances.
  • Subletting, rent reporting services, and loans are additional ways you can break your lease early without hurting your credit score.
  • Documenting communication with your landlord and the condition of your unit when you move in and out, as well as seeking legal advice, can help you when you must break a lease.

Continue your learning

Both your credit score and your handling of lease agreements are complex topics. Though this article has been thorough, it hasn’t taught you everything. Here are some ways to learn more.

Learn more about optimizing your credit score

Whether or not you break a lease is just one factor that can influence your credit score. Read SuperMoney’s Ultimate Guide to Credit Reports to learn how your credit score works and what you can do to improve it.

Learn more about rent and your credit score

When most people sign a lease agreement, they have no idea they’ll have to break the lease early. But life happens. That’s why it’s smart to know as much as you can about how to break a lease the right way and how breaking leases will affect your credit.

To that end, here’s three SuperMoney articles for your follow-up reading assignment:

  1. Ultimate Guide to Buying Out of a Lease Early
  2. Rental Credit Checks: Everything You Need To Know
  3. What Is In Your Credit Score?
View Article Sources
  1. Breaking A Lease Tenants Unions of Washington State
    A convenient summary of the legally justifiable reasons for breaking a lease in that state.
  2. Can a Broken Lease Affect Buying a House?Experian
  3. Breaking a lease won’t appear on your credit report, but this is when it could really hurt your credit — CNBC
  4. Can You Break Your Lease During a Pandemic? — Thomson Reuters FindLaw
  5. Can You Terminate Your Lease Due To Military Orders? —
  6. Can Your Car Insurance Increase Due to Your Credit History? — Zacks
  7. Does Breaking a Lease Affect Your Credit? — Experian
  8. Find Help Near You —
  9. How Rent Withholding WorksNolo
  10. How to get out of a lease — Common
  11. Military Employment Verification — Defense Finance and Accounting Service
  12. Revised Code of Washington §§ 59.18.200, 59.18.090, 59.18.575, 59.18.352, 59.18.354 — Washington State Legislature
    The actual state statutes governing lease-breaking in Washington.
  13. Tenant’s Right to Break a Rental Lease in WashingtonNolo
    Another helpful overview of the legally justifiable reasons for breaking a lease in Washington.
  14. The Servicemembers Civil Relief Act (SCRA) — Consumer Financial Protection Bureau
  15. The Servicemembers Civil Relief Act (SCRA) — U.S. Department of Justice
  16. Welcome to SCRA — Defense Manpower Data Center
  17. Buy or Lease? What to Know Before You Decide on Your New Ride — SuperMoney
  18. Can You Lease a Car and Then Buy It? — SuperMoney
  19. How Long Does it Take to Improve Your Credit Score? — SuperMoney
  20. How to Buy Out a Leased Car in 5 Steps — SuperMoney
  21. How to Get Out of Your Apartment Lease in 5 Steps — SuperMoney
  22. Rental Credit Checks: Everything You Need To Know — SuperMoney
  23. The Ultimate Guide to Credit Reports — SuperMoney
  24. Thinking About Buying Out of Your Car Lease? Here Are the Average Lease Buyout Loan Rates — SuperMoney
  25. Ultimate Guide to Buying Out of a Lease Early — SuperMoney
  26. What Is In Your Credit Score? — SuperMoney