California renters who pay their rent on time can soon have those good habits reflected in their credit scores thanks to a new bill just signed into law.

Gov. Gavin Newsom signed a bill last Thursday that requires California landlords in multi-family housing to allow tenants the option to opt out of having their rent payments reported to credit bureaus. This new bill exempts small landlords with units less than 15 and assisted housing developments.

AB 2747 aims to help renters build up their credit scores, which is important for people who plan on owning a home or securing loans.

“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,” State Assemblymember Matt Haney said.

Haney, who spearheaded this bill, introduced the idea in June.

People who have entered leases on or after April 1st, 2025 will be given the option at the time of the lease agreement and then at least once annually after that. Other outstanding leases as of Jan. 1st, 2025 will be given the option by landlords no later than April 1st, 2025 and then at least once annually moving forward.

The new law will also allow landlords to charge a $10 fee for providing the services.

Renters who decide they want to opt into the service, can opt out with a written agreement. However, if they opt out, they cannot opt back in for about 6 months.

If renters who use the service fail to pay within 30 days, they will no longer be allowed to use the service for another six months. Landlords will not be able to deduct the unpaid fee from the renter’s security deposit or terminate their lease.

SB 649, a similar low-income housing law that went into effect in 2021 will expire next summer.

Ed. Note: This story written by Kamryn Martell.

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