New Bill Allows Tenants to Have On Time Rent Payments Reflected on their Credit Scores

SACRAMENTO, CA – The chair of the California Legislative Renters Caucus, Matt Haney (D-San Francisco), has introduced legislation that brings rent reporting up to standard practice by requiring landlords to give tenants the option to opt into reporting their positive rent payments to a credit bureau agency.

“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. This is an unfair practice that is further pushing millions of renters into cycles of debt and poor financial health,” said Assemblymember Haney.

Credit scores are designed to reflect the good and the bad of a person’s financial history. Usually, if a person misses a payment their score will go down and if they stay on top of their payments their score will increase. However, this is not happening when landlords report rent payments to a credit bureau agency. Millions of renters around the state are paying their rent on time yet they never see a positive impact on their credit scores. Unfairly, if they ever fall behind on their rent payment, that negatively shows up on their credit report and brings their scores down.

“I’ve been renting in off-campus housing for the last year but my rent payments have never shown up on my credit score,” said David Ramirez, a UCLA student and the Government Affairs Chair for the UC Student Association. “As I’m preparing for life after graduation, I’m realizing how crucial having good credit is to buying a car and renting other apartments, but my one main consistent payment has never been reported to a credit bureau agency. Having my rent payments count towards my credit history would’ve made the transition to post college life much easier.”

Additionally, although credit scores are a fundamental part of living in the United States, 1 in 10 Americans do not have a credit score. This is not because they haven’t been paying their bills on time – but because none of their monthly expenses are able to be used to build their credit. For those who have credit scores, millions of them have poor credit only because the bills that they prioritize paying are not reported to the credit bureaus. For example, none of the on-time rent payments that the 17 million renters in California prioritize every month ever get reported. So even though renters pay that every month, only secondary expenses like credit card payments and student loans are ever reflected in their credit score.

Credit scores are crucial to securing financial equity—whether that is through homeownership or a car loan. Banks often use credit scores to determine if a person can qualify for a mortgage and what the terms of their loan would be. Not reporting a tenant’s rent payment to a credit bureau is making it harder for millions of people to eventually become homeowners.

AB 2747 will require landlords to allow renters to opt into positive rent reporting for their credit scores. This bill only applies to buildings with more than 15 units and allows landlords to collect a fee of $10 or the actual cost of rent reporting, whichever is less, from the tenant.

AB 2747 will next be heard in the Senate Judiciary Committee.

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