Calling to collect
Rental debt is now one of the top consumer complaints in debt collection, according to the Consumer Financial Protection Bureau. Nationwide, renters owe an estimated $9 billion in back rent, with approximately 4.5 million households struggling to keep up with payments. While landlords have the right to collect unpaid rent, everyday renters like Murray — who followed the terms of his lease — often bear the brunt of aggressive debt-collection tactics.
Consumer advocates warn that landlords are using credit reports as a weapon, bypassing the legal system and leaving tenants with little recourse. In the past, rent disputes played out in small-claims court, where tenants could at least present their case.
Landlords, however, see it differently. With small-claims judgments for unpaid rent no longer appearing on credit reports as of 2017, they argue that reporting tenants to credit bureaus like Experian, Equifax and TransUnion is one of the few ways to enforce accountability.
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Learn MoreHow it impacts renters
A damaged credit score can have long-term consequences for renters. Many major lenders, such as Citi and Bank of America, maintain strict criteria for determining loan eligibility.
“The practical effect of having a poor credit score is that your access to mainstream funding is limited or nonexistent,” John Ulzheimer, formerly of Fair Isaac Corporation (FICO) and Equifax, told CNBC Select.
This doesn’t just make securing a loan more difficult — it also affects the interest rates borrowers receive. For instance, a borrower with a 620 credit score might face an interest rate of approximately 4.8% on a $355,328 home, resulting in annual interest payments of about $17,056.
Meanwhile, a buyer with a score between 760 and 850 could secure a much lower 3.2% rate, bringing their annual interest down to roughly $11,370. Over time, this difference could add up to tens of thousands of dollars in additional costs. Bad credit can also impact auto and homeowners insurance rates, as most U.S. states permit insurers to use credit-based scoring when determining premiums.
Murray’s daughter also learned this the hard way. After a landlord dispute in 2019 tanked her credit score, she struggled to find another apartment until Murray stepped in to settle the debt. When he faced a similar issue in 2022, he fought back — but despite providing evidence, his dispute was rejected.
His credit score still sits in the low 700s. For renters like Murray and his daughter, even a single disagreement can trigger a financial chain reaction — one that is rarely easy to undo.
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