Does getting evicted lower your credit score? Here's what you need to know

Being evicted can cause huge ripple effects across your finances. An eviction may put you in a situation where you need to unexpectedly shell out more cash for moving expenses and a new place to live, or go deeper into credit card debt to pay for those unforeseen costs. And if the reason you're being evicted is because you're behind on your rent, that behavior will show up on your credit report and drag down your score.

But the eviction itself shouldn't directly change your credit score. Below, CNBC Select explains why and gives some tips on how to monitor and improve your credit score.

• Can an eviction show up on your credit report?
• How does an eviction affect your credit score?
• What should you do if an eviction has negatively impacted your credit score?
• Bottom line

An eviction by itself won't show up on your credit report, which is basically a record of your past and current credit activities. However, if you were evicted because you didn't pay your rent or mortgage, those debts almost certainly will drag down your credit score.

Let's say you're being evicted because you owe your landlord overdue rent payments. If your landlord sells this debt to a collections agency, that agency will come after you for payment and a record of this can show up on your credit report. In general, these unpaid debts stay on your report (and lower your credit score) for about seven years after you've paid off what you owe.

However, if you get evicted for a non-financial reason, the eviction won't directly affect your credit. Though of course, depending on your personal circumstances, losing your home will almost certainly put a strain on your finances. Assuming your emergency fund isn't up to the task, you might have to take on additional debt in the form of credit card balances or personal loans that could then weigh down your credit score.

If you're being evicted because of unpaid bills or debts, those will likely appear on your credit report and tank your credit score. According to FICO, your payment history is the single biggest factor that goes into your score, so a pile of unpaid bills will likely see your score sink quickly. If you find yourself in that situation and want to know just how bad things have gotten, you'll need to keep an eye on your credit report.

Monitoring your credit report is actually easier than you might think. Experian lets you create a free account so you can access your credit report, which gets updated every 30 days. You can also use the service to see how your credit score changes over time and get alerted whenever major changes occur, like adding new debt accounts or lines of credit.

If your credit score is lowered because of unpaid rent, you'll want to try to pay what you owe as quickly as possible so the collections account can be closed and the negative impact can be minimized as much as possible. Again, it takes about seven years after you pay off a debt for it to typically stop affecting your credit score.

If you're struggling to pay rent, one of the worst things you could do is simply brush it under the rug or try to ignore it. This is how you wind up racking up a balance that your landlord can report to a collections agency.

Instead, speak to your landlord sooner rather than later and see if you can work out a payment plan or some other adjustment that will help you avoid getting evicted and having any unpaid balances go to collections. You could also consider working with a credit counseling agency that could help set you up with a debt management plan — start by searching for agencies via the National Federation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA) to find a reputable and legitimate agency.

An eviction as a result of unpaid rent and bills typically affects your credit score indirectly — it's the unpaid debt that led to the eviction (or the debt you have to assume because you're looking for a new home) that's hurting your credit score, not the eviction itself.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit monitoring products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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