New California Law Allows Tenants to Build Credit with On-Time Rent Reporting
Beginning in 2025, California law will require certain landlords to give tenants the option to have their on-time rent payments reported to a credit reporting agency. This new rule can help renters establish or improve their credit profile by reflecting consistent rent payments.
Key highlights of the law:
- Mandatory Offer from Landlords: Landlords must offer tenants the choice to have their positive rent payments reported to a national credit bureau. This applies to all new leases signed on or after April 1, 2025, and to existing tenants by no later than that date. Landlords must also renew this offer at least once every year.
- What Tenants Can Expect: The offer must include clear information about:
- The voluntary nature of the program.
- The credit bureaus that would receive the rental data.
- Any monthly fee involved—capped at $10 or the actual cost, whichever is less.
- How to sign up or cancel at any time.
- A 6-month waiting period to opt back in after choosing to cancel.
- Cost Details and Tenant Protections:
- If the landlord has no cost to provide the service, no fee may be charged.
- Tenants cannot be evicted or penalized for not participating or failing to pay the optional fee.
- Fees cannot be deducted from the tenant’s security deposit.
- How to Opt In: Tenants may accept the offer by mail or email. If the landlord sends the offer by mail, they must include a pre-stamped return envelope for the tenant’s response.
- Landlords Not Covered by This Law:
- Small-scale landlords with just one building and 15 or fewer units—unless they’re a corporation, REIT, or certain LLCs.
- Affordable housing providers covered under specific government programs.
- No Impact on Other Tenant Rights: This law does not override the tenant’s right to repair and deduct or withhold rent when legally allowed. Withholding rent for valid reasons will not be reported as a late payment under this program.
- Only On-Time Payments Are Reported: Landlords may only report full, on-time payments. Late or partial payments are excluded from this reporting option.
This new requirement empowers tenants to use their rental payment history to their benefit, helping them build a stronger credit foundation.
Original Source: leginfo.legislature.ca.gov – Civil Code Section 1954.07