Governor Gavin Newsom on Thursday signed a bill that allows some renters to allow their landlords to report their positive rent payments into a credit bureau agency.
Assembly Bill 2747, sponsored by Assemblymember Matt Haney, D-San Francisco, was created to allow renters to see a positive impact on their credit score when they pay their rent on time, he said.
“Many renters spend a majority of their income on rent and prioritize their rent payments over all other expenses each month,” said Haney in a statement released by his office. “But their on-time rent payments are never reflected on their credit scores, even when their missed payments are.”
Haney called such practices “unfair” and designed to push renters into cycles of debt and poor financial health.
The bill requires landlords to opt into positive rent reporting for their credit scores, but only applies to buildings or rental businesses with more than 15 units. It also allows landlords to collect $10 or the actual cost of rent reporting each month, whichever is less.
The new law is an extension of a 2020 law that allows people living in subsidized housing to report positive rent payments to a credit bureau.
Haney said this new law could affect many of the 17 million renters statewide.
In June, the Western Center on Law & Poverty, a legal group that advocates for lower income Californians, wrote a letter in opposition to the bill, asking that it be amended to include renters living in properties with less than 15 units.
“A tenant’s rights under the law should not depend on the number of units their landlord owns,” reads the letter.
The organization also asked to clarify that landlords cannot deduct the credit reporting fee from paid rent.
“Without these changes, the bill will do more harm than good by codifying a harmful and unworkable exemption and leaving tenants who opt in to credit reporting vulnerable to eviction,” read the letter.
The California Rental Housing Association, which advocates for landlords, opposed the bill along with other rental organizations such as the Southern California Rental Housing Association, which said it would create administrative and financial burdens for landlords.
The law goes into effect for new leases entered on or after Jan. 1, 2025.