California Governor Gavin Newsom has signed a bill that will reward renters who keep up with their payments by giving them positive credit reports.
Assembly Bill 2747, signed on September 19, means tenants now have the option to request that their landlord report positive rental payment information to at least one nationwide credit bureau. It only applies to buildings with at least 15 units, and small landlords and assisted housing developments are exempt.
Building a good credit score is an essential part of securing loans or buying a house, but rent payments, unlike mortgage, vehicle loan, and credit card payments, are not typically reported to credit bureaus. Therefore, they do not have a direct impact on scores.
“Many renters spend a majority of their income on rent and prioritize their rent payments over all other expenses each month—but their on-time rent payments are never reflected on their credit scores, even when their missed rent payments are,” bill author Assemblymember Matt Haney said. He said a lack of reporting on-time rental payments to credit agencies is an “unfair practice” that pushes “millions of renters into cycles of debt and poor financial health.”
A stock image of a sign reading “For Rent” outside a home. Landlords in California must now report positive rental payments to credit agencies if the tenant opts in.
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The bill is likely to impact millions, given that in 2022, nearly 17 million residents of the Golden State were tenants, according to Tenants Together, a California rental rights non-profit. According to the U.S. Census Bureau, renters make up a much larger share of households in California—44 percent—than anywhere else in the U.S. bar New York, where 46 percent rent their homes.
From April 1, 2025 onwards, landlords are required to provide tenants with the option to have positive payments reported to their lease agreement. It must be offered by the landlord at the time of signing the lease and then once every year thereafter.
For leases already in effect by January 1, 2025, landlords must offer this service no later than April 1, 2025, and continue to do so at least once every year.
The legislation also permits landlords to charge a fee of $10 or the actual cost for providing the service, whichever is lower, from each tenant who chooses to participate, unless there is no cost for reporting. Renters who opt in are free to opt out by making a written request, but cannot opt back in for another six months.
According to the Urban Institute’s Housing Matters initiative, rental payments are “strong predictors of mortgage performance but traditionally are not considered in mortgage underwriting because the majority of rent payments are not reported to the credit bureaus and therefore not reflected in the credit scores.”
