Paying rent on time in California will soon positively reflect on your credit score

Paying rent on time can to reflect on credit score in CA

California renters will soon be able to have paying their rent on time reflect on their credit scores.

LOS ANGELES - California renters will soon be able to have on-time rent payments reflected on their credit score, but it's going to cost you. This comes after Governor Gavin Newsom signed Assembly Bill 2747 into law on Thursday.

AB 2747 requires landlords of buildings with 15 or more units to offer tenants the option to report their on-time rent payments to credit bureaus.

It's meant to help renters build good credit scores, which is crucial for things like securing loans or future housing.

While missed rent payments negatively impact credit, on-time payments typically don't contribute to a positive credit score. The bill ensures that renters who consistently pay on time get credit for it.

"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," said chair of the California Legislative Renters Caucus, Matt Haney (D-San Francisco). "This is an unfair practice that is further pushing millions of renters into cycles of debt and poor financial health."

Landlords are allowed to charge a small fee (up to $10) for providing this service. The law takes effect in 2025 and is seen as a way to promote financial equity, especially for tenants who may not have traditional credit histories.

This change is significant for the 17 million renters in California, many of whom spend a large portion of their income on rent but don't see this reflected positively in their credit scores.