The Hardball Tactic Landlords Use to Tank Your Credit Score

Summary

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Episode Overview

Podcast: WSJ Your Money Briefing
Episode: The Hardball Tactic Landlords Use to Tank Your Credit Score
Date: February 21, 2025
Host: Mariana Aspuru
Guest: Caitlin Ostroff (Wall Street Journal Reporter)

Main Theme:
Landlords have adopted a powerful new weapon in rent disputes: reporting alleged debts directly to credit bureaus—often before or instead of going to court. This episode explores how this tactic devastates tenants’ credit scores, the legal and bureaucratic challenges renters face to clear their names, and practical advice on what tenants can do to protect themselves.

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Key Discussion Points & Insights

1. The Rise of Direct Credit Reporting by Landlords

[01:38–02:08]

• Since it has become harder for landlords to use court judgments and eviction records to impact tenants' credit (due to a 2017 change in how credit agencies use public records), landlords are increasingly using debt collectors who report alleged rental debts directly to credit bureaus.
• This method allows them to bypass small claims courts and "park something more permanently" on a tenant’s credit history.

“It's become easier for some landlords to decide, I'm gonna bypass the small claims court and I'm just going to send it on to the debt collector and let it be their problem and let them try and recoup the funds.”
—Caitlin Ostroff [02:08]

2. How the Process Works & Why It’s So Damaging

[03:02–04:44]

• Landlords claim money is owed (for unpaid rent or even minor damages/charges).
• Debt collectors then hound tenants and, if unsuccessful, report the debt to credit bureaus, effectively labeling tenants as credit risks.
• The burden of proof falls on tenants to dispute the debt, but "it is difficult, according to consumer lawyers ... to get this information removed," even with documentation.

“What the debt collector will then in turn do ... is they will forward it on to one of the credit ratings agencies and will say, Caitlin has not paid this. She is not credit worthy. Please add this to her credit report.”
—Caitlin Ostroff [03:37]

“It is difficult, according to consumer lawyers ... to get this information removed from your account, even with proof that you think clears you of the alleged debts.”
—Caitlin Ostroff [04:20]

3. Tenants’ (Limited) Recourse

[04:44–06:23]

• The system heavily favors landlords; checks and balances are weak, making it hard for tenants to undo the damage.
• Disputing the report through credit bureaus is often ineffective—even with documentation, many tenants must resort to lawsuits.
• Most lawsuits settle, which can lead to the removal of the debt from the credit report, but “it’s a longer process than just being able to send a letter.”

“A lot of these cases are brought to federal court.”
—Caitlin Ostroff [04:44]

“Often just disputing straight to the credit bureaus doesn't actually change anything.”
—Caitlin Ostroff [06:23]

4. The Impact on Credit Scores

[05:35–06:16]

• Negative reporting can devastate a credit score. Drops of 100–200 points are possible—even for minor alleged debts.
• The exact impact is unpredictable because the "secret sauce" of credit scoring is opaque.

“We talked to some people whose credit score went down one or 200 points as a result of this.”
—Caitlin Ostroff [05:39]

5. Steps Tenants Can Take—Before and During Disputes

[06:54–08:00]

• If you're currently in a dispute:
  • Immediately dispute the debt with the debt collector and credit bureaus.
  • Gather and provide as much documentation as possible.
  • Reach out to a lawyer or consumer protection advocate.

“First and foremost, you should dispute. Having the documentation that you say that's not right helps if you need to go the legal route.”
—Caitlin Ostroff [07:01]

• Proactive measures:
  • Keep thorough records from the outset—document all lease agreements and communications in writing.
  • Take detailed photos of the property at move-in and move-out.
  • Keep copies of all maintenance requests and responses.

“If you are moving into an apartment, take photos on the first day, document the state of everything. Do the same when you're moving out, and just try to keep good records.”
—Caitlin Ostroff [07:29]

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Notable Quotes & Memorable Moments

• The Power Imbalance:

  “It's kind of ... the landlord, in these cases, does have quite a lot of power in setting this whole thing in motion. And it can be very hard to undo.”
  —Caitlin Ostroff [04:44]

• Credit Damage Scope:

  “We talked to some people whose credit score went down one or 200 points as a result of this.”
  —Caitlin Ostroff [05:39]

• On Documentation:

  “Lots of documentation ... Be specific. That way, if a dispute occurs, you have evidence to back up whatever your side is.”
  —Caitlin Ostroff [07:29]

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Important Segment Timestamps

• [01:38] — Introduction to landlord credit reporting tactic
• [02:08] — Why landlords are pursuing this route
• [03:02] — Step-by-step explanation of the process
• [04:44] — Legal recourse and settlements
• [05:35] — How much a credit score can drop
• [06:16] — Disputing credit issues and challenges
• [06:54] — Practical advice for tenants in disputes
• [07:29] — Proactive advice: documentation and best practices

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Conclusion

This episode shines a bright light on a growing practice that puts renters at the mercy of landlords and debt collectors, often with little due process or recourse. With credit scores at stake—and thus future housing, loans, and jobs—tenants must be proactive: document everything, dispute debts aggressively, and be prepared to seek legal help if necessary. As Caitlin Ostroff emphasizes, “It’s a documentation game, and unfortunately, right now, the system makes it hard for tenants to win.”

Transcript

[Viking Cruise Narrator]

Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares.

[Mariana Aspuru]

Discover [e-mail] here's your money briefing for Friday, February 21st. I'm Mariana Aspuru for the Wall Street Journal. Landlords are using a harsh tactic in rent disputes, damaging tenants credit scores.

[Caitlin Ostroff]

And we talked to some people whose credit score went down one or 200 points as a result of this. And so it can be an instance where, you know, maybe the alleged debt is small, or it can be that the credit ratings agencies say just because you have this debt, we think that it is significant and it's going to cause your credit score.

[Mariana Aspuru]

To follow up, we'll talk with Wall Street Journal reporter Caitlin Ostroff about how tenants are fighting back. That's after the break.

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[Mariana Aspuru]

One most trusted app. Based on August 2024 proprietary survey, more than half of all small claims disputes are rent cases. But unlike in court, landlords and debt collectors can act as both judge and jury by reporting rent disputes directly to credit bureaus. Wall Street Journal reporter Caitlin Ostroff joins me. Caitlin, why are landlords taking this approach?

[Caitlin Ostroff]

So this is in part because there was a change in how credit agencies use public records in 2017. It's harder to get things like evictions, other sort of public judgments onto credit reports now as a way to level the playing field more in favor of tax tenants. And so now landlords who are worried that whoever they're renting to might not make good on the lease, it's a new way where they can sort of park something more permanently to report alleged debts owed essentially onto the credit agencies through debt collectors. But we're also just seeing this because it's become easier for some landlords to decide, I'm gonna bypass the small claims court and I'm just going to send it on to the debt collector and, and let it be their problem and let them try and recoup the funds.

[Mariana Aspuru]

So they're kind of taking an extra step now that they didn't used to. Yes, what kind of power does this give landlords?

[Caitlin Ostroff]

So this gives landlords the power to basically decide. I say, you owe me X amount of money. Sometimes that's the rent from the lease agreement if a month or two isn't paid. But it can also be for incidental charges that landlords claim are owed to them. We've seen cases where if a stove or some other part of the apartment needs to be replaced, sometimes that will end up on the list of alleged money owed. So if you are a renter and your landlord is claiming that you owe X money, the first step that they take in this process is they call a debt collector and they say, caitlin Ostroff owes me X amount of money because of this. And so the debt collector says, okay. And they will call me or send emails and say, this debt is alleged. You have to pay this. And I might dispute that to them. And they'll go back to the landlord. The landlord often will say, no, this debt is correct. And that will be that. What the debt collector will then in turn do is if they don't think that they can get this money from me just by calling me, is they will forward it on to one of the credit ratings agencies and they will say, caitlin has not paid this. She is not credit worthy. Please add this to her credit report. I can go and contest that with the credit agencies as well after it's published on my credit report. But at each step in this way, it is difficult, according to consumer lawyers we've spoken to, to get this information removed from your account, even with proof that you think clears you of the alleged debts.

[Mariana Aspuru]

So it's difficult to have sort of checks and balances, for lack of a better word here.

[Caitlin Ostroff]

It's kind of, yeah, the landlord in these cases does have quite a lot of power in setting this whole thing in motion. And it can be very hard to undo, which is why a lot of these cases are brought to federal court.

[Mariana Aspuru]

And how effective is that?

[Caitlin Ostroff]

Almost all of these cases end in settlements. On the one hand, you can argue that is effective because most of the people who settled couldn't speak to us about, like, what had occurred. But by and large, attorneys we spoke to said that when a settlement happens, it does get removed from the credit report in some ways. You know, that can be a tool. But. But it's also very frustrating. And it's a longer process than just being able to send a letter to a credit agency and say, hey, I saw that you added this. Here are photos from before I moved in showing that this was in this condition, here is a copy of the lease saying that I followed the correct procedures. Can you please remove that? And not having that work?

[Mariana Aspuru]

And how much weight does this damage carry on your credit score?

[Caitlin Ostroff]

I mean, it can carry a lot of damage, but that's the other thing, is the secret sauce that makes credit scores what they are isn't a very straightforward or transparent system. The amount in which this impacts your credit score can range widely. And we talked to some people whose credit score went down one or 200 points as a result of this. And so it can be an instance where, you know, maybe the alleged debt is small and so the impact is much smaller. Or it can be that the credit ratings agencies say, just because you have this debt, we think that it is significant and it's going to cause your credit score to follow up.

[Mariana Aspuru]

But once renters see this hit on their credit score, can they dispute it before it starts affecting their everyday lives, their other apartments?

[Caitlin Ostroff]

You can dispute it at the debt collector and you can also dispute it to the credit agencies. But often what we've heard from lawyers is that even if people have documentation that they furnish to debt collectors, credit agencies, that often isn't enough to get it taken off. And a lot of the people we've spoken to who have sued, not just for monetary debt damages, for like, what their lower credit score has financially impacted them over, it's often just to even get it removed. Because often just disputing straight to the credit bureaus doesn't actually change anything.

[Mariana Aspuru]

If someone's currently dealing with a rent dispute and they want to avoid this negative hit to their credit score, what are some steps that they can take?

[Caitlin Ostroff]

First and foremost, you should dispute. That's what every consumer lawyer we've spoken to had told us is having the documentation that you say that's not right helps if you need to go the legal route. And then also reaching out to either a lawyer or a consumer advocate help organization. Reach out to get advice from someone.

[Mariana Aspuru]

Are there things that you can proactively do before you find yourself in a dispute over your rental payments? Just in case this happens, you have everything you need to sort of back your case.

[Caitlin Ostroff]

It's just a matter of lots of documentation. So if you're negotiating a lease or terms of a lease, do that. Inviting. Or at least get copies of things that you discuss over the phone. Inviting. If you are moving into an apartment, take photos on the first day, document the state of everything, do the same when you're moving out, and just try and keep good records. Of when you've communicated about certain issues, be specific. That way, if a dispute occurs, you have evidence to back up whatever your side is.

[Mariana Aspuru]

That's Wall Street Journal reporter Caitlin Ostroff. And that's it for your Money briefing. Tomorrow we'll have our weekly markets wrap up what's news in Markets? This episode was hosted and produced by me. Ariana Aspuru. Jessica Fenton and Michael Lavalle wrote our theme music. Our supervising producer is Melanie Roy, Aisha Al Muslim is our development producer, Scott Salloway and Chris Sinsley are our deputy editors and Falana Patterson is the Wall Street Journal's head of news audio. Thanks for listening.

[Caitlin Ostroff]

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