AB 2747 requires landlords to give tenants the option to opt into reporting their on-time rent payments to a credit bureau agency
Sacramento – Assemblymember Matt Haney’s (D-San Francisco) AB 2747, which 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, passes the California State Legislature.
“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 decrease, and if they make their payments on time, their score will increase. However, this is not happening when landlords report rent payments to a credit bureau agency. Millions of renters in California are paying their rent on time, yet never see a positive impact on their credit scores. Unfairly, if they fall behind on their rent payment, that negatively shows up on their credit report and brings their scores down.
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.
Note
The bill was introduced in June where Haney said in a press release, 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.
Other Bills:
- Aug 31 – California Bill Allows Undocumented Immigrants Access to Down Payment Assistance for Home Loans
- July 5 – California Law Limiting Security Deposits on Rentals Now in Effect
