California Governor Gavin Newsom recently signed Assembly Bill 2747, offering a financial boost to renters who maintain timely rental payments.
New Legislation for Positive Credit Reports
Landlords in California will now have the option to report positive rental payment information to credit bureaus, benefiting tenants who prioritize rent payments each month. This new law, signed on September 19, applies to buildings with at least 15 units, excluding small landlords and assisted housing developments.
Addressing Unfair Credit Practices
Assemblymember Matt Haney, the bill's author, emphasized the significance of reporting on-time rent payments to credit agencies. He noted that while many renters prioritize rent payments over other expenses, these positive actions are not always reflected in credit scores, leading to financial challenges.
Impact on California Renters
With nearly 17 million residents in California being tenants, this legislation is poised to impact a significant portion of the state's population. Renters make up 44 percent of households in California, a figure second only to New York.
Implementation Timeline
Starting from April 1, 2025, landlords must offer tenants the option to have positive rental payments reported in their lease agreements. For existing leases by January 1, 2025, this service must be provided no later than April 1, 2025, and annually thereafter.
Cost and Opt-Out Options
Landlords can charge a fee of up to $10 or the actual cost for reporting positive payments. Tenants can opt out by written request, with a six-month waiting period to opt back in.
Improving Mortgage Opportunities
The Urban Institute's Housing Matters initiative highlights the importance of rental payment history in assessing mortgage performance. By including rental payments in credit reports, this legislation aims to create a more comprehensive financial profile for renters. Overall, the new bill offers a positive step towards financial inclusion and stability for California renters.