In California, tenants who pay their rent on time without any delays will soon be able to improve their credit scores. This comes as Governor Gavin Newsom signed a bill that allows rent payment records for on-time tenants to be reflected in their credit scores.

According to the governor’s office, on the 19th, Governor Gavin Newsom signed Assembly Bill (AB) 2747, which was proposed by Assemblymember Matt Haney (Democrat, San Francisco) and passed by the state legislature.

As a result, tenants who have consistently paid their rent responsibly will now have the opportunity to raise their credit scores. The governor's office stated, “Up until now, tenants who paid rent on time did not see it reflected in their credit scores, while landlords would report late payments to credit reporting agencies, which has been criticized as unfair.”

Assemblymember Haney, who proposed the bill in June, said, “Most tenants prioritize rent payments above all other expenses, but responsible payment records have not positively impacted their credit scores. This unfair practice has pushed millions of tenants into debt and financial instability.”

According to the bill, landlords of properties with 15 or more units will be required to offer tenants the option to report their rent payment records to credit reporting agencies starting April 1st of next year. Additionally, by April 1st, 2025, landlords must provide credit score reporting services for tenants with ongoing lease agreements as of January 1st, 2025.

Tenant and consumer advocacy groups have unanimously welcomed this decision by the state government. For the majority of tenants, rent is their largest expense, yet tenants who paid on time received no credit score benefits until now.

However, small landlords with fewer than 15 units and landlords who provide government-subsidized housing are exempt from this requirement. Landlords can charge tenants a fee of $10 or the actual service cost, whichever is less, for reporting to credit agencies.

Tenants who do not opt for the credit reporting service must submit a written request to their landlord, and they cannot re-enroll in the service for six months after opting out.

If a tenant fails to pay the service fee within 30 days, the service will be discontinued, but they can re-enroll after six months. The fee cannot be deducted from the security deposit, and failure to pay the fee will not result in the termination of the lease agreement.

Meanwhile, a similar law that has been in effect since 2021 for low-income tenants is set to expire in the summer of next year.



<Sehee Roh>