rentCalifornia’s Assembly Bill 2747 (AB 2747), effective April 1, 2025, introduces a significant shift in the rental housing landscape by mandating that certain landlords offer tenants the option to have their on-time rent payments reported to credit bureaus. This initiative aims to assist renters in building their credit profiles through consistent rent payments.

The Credit Impact of Rent Reporting

Rent is often the largest monthly expense for many individuals, yet historically, it hasn’t contributed to building credit. AB 2747 seeks to change this by allowing renters to have their on-time rent payments reported to credit bureaus, thereby aiding in credit building.

A study by the Credit Builders Alliance found that 79% of participants experienced an average credit score increase of 23 points after rent reporting. FrontLobby+1Roost+1

Assemblymember Matt Haney, the bill’s author, emphasized the importance of this legislation, stating:Digital Democracy | CalMatters

“Credit scores are crucial to securing financial equity—whether that is through homeownership or a car loan. Not reporting a tenant’s rent payment to a credit bureau is making it harder for millions of people to eventually become homeowners.” Senate Judiciary Committee

Who Must Comply with AB 2747?

The law applies to:

• Landlords of residential properties with 16 or more units.
• Corporate landlords (including LLCs with corporate members and REITs) owning multiple residential properties, even if individual properties have 15 or fewer units.

Individual (non-corporate) landlords owning a single property with 15 or fewer units are generally exempt.

Key Requirements for Landlords

1. Offering Rent Reporting:

• For leases initiated on or after April 1, 2025, landlords must offer rent reporting at lease signing and at least annually thereafter.
• For existing leases as of January 1, 2025, the offer must be made by April 1, 2025, and at least annually thereafter.

2. Tenant Notification:

Landlords must provide a written notice that includes:

• A statement that rent reporting is optional.
• Identification of the credit bureaus to which payments will be reported.
• Any associated fees (capped at $10 per month or the actual cost, whichever is less).
• Instructions on how to opt in or out.
• A signature block for tenant acknowledgment.

3. Opt-In and Opt-Out Provisions:

• Tenants can opt in at any time after receiving the offer.
• Tenants can opt out at any time, but cannot re-enroll for at least six months after opting out.

4. Fee Limitations:

• Landlords may charge a fee for rent reporting, not exceeding $10 per month or the actual cost incurred, whichever is less.
• If the landlord incurs no cost, no fee can be charged.

5. Non-Compliance Restrictions:

• Failure to pay the rent reporting fee cannot be grounds for eviction or lease termination.
• Unpaid fees cannot be deducted from the tenant’s security deposit.
• If the fee remains unpaid for 30 days or more, the landlord may cease r rent reporting, and the tenant cannot re-enroll for six months.

Benefits for Tenants

• Credit Building: On-time rent payments can positively impact credit scores, facilitating access to loans, credit cards, and favorable rental terms.
• Financial Inclusion: Rent reporting provides an avenue for renters, especially those without traditional credit histories, to build credit profiles.
• Empowerment: Tenants gain control over their financial narratives by choosing to have their rent payments reflected in their credit reports.

Considerations for Landlords

• Administrative Adjustments: Landlords may need to implement systems or partner with third-party services to manage rent reporting efficiently.
• Tenant Communication: Clear communication regarding the opt-in process, benefits, and any associated fees is essential.
• Compliance: Staying informed about the requirements and ensuring timely offers and accurate reporting is crucial to comply with AB 2747.

AB 2747 represents a significant step toward recognizing rent payments as a vital component of financial health. By facilitating credit building through rent reporting, the law aims to promote financial equity and inclusion for California renters.

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At AllView Real Estate, we go beyond traditional property management. We’re not just here to collect rent or coordinate repairs — we’re here to elevate your experience as a property owner and optimize every facet of your real estate investment. If you are busy or you own several properties and it has become difficult for you to manage, hire an experienced Los Angeles and Orange County property manager like AllView Real Estate. Give us a call and let us show you how to get the most out of your property. You can reach us at (949) 400-4275 or send us an email at info@allviewrealestate.com