New Law Expands Tenants’ Rights to Report On-Time Payments
Starting in 2025, a new California law gives residential tenants more control over their credit reporting by allowing them to opt in to having their on-time rent payments reported to a credit agency. This could help tenants build or improve their credit history.
Here’s what the new law means:
Landlords Must Offer Reporting:
Landlords are required to offer tenants the option to report their positive rent payments to a national credit bureau. This applies to new leases signed on or after April 1, 2025, and for current tenants by April 1, 2025. The offer must be made at lease signing and at least once a year after that.
What Tenants Will Receive:
- Tenants will be provided with written details about the reporting option, including:
- That participation is voluntary.
- Which credit agencies will receive the rent information.
- Any monthly fee involved (up to $10 or the actual cost—whichever is less).
- Instructions for opting in or out.
- The ability to join at any time and opt out later if desired.
Fees and Restrictions:
- If a tenant opts in, the landlord may charge a fee (not to exceed $10/month), but only if there’s a real cost to the landlord.
- Not paying the fee will not affect tenancy or the tenant’s security deposit, but the landlord can stop reporting after 30 days of non-payment.
- After opting out, tenants must wait six months before opting back in.
How to Participate:
- Tenants can respond by mail or email. If offered by mail, landlords must include a stamped return envelope.
Who Is Exempt:
- Smaller landlords (owning one building with 15 or fewer units, and not a corporation, REIT, or LLC with a corporate member) and assisted housing providers are not required to offer this reporting.
Tenant Rights Are Protected:
- Participating in rent reporting doesn’t waive any rights related to habitability. If a tenant legally withholds rent for repairs or other allowable reasons, it won’t be counted as a late payment under this law.
Only On-Time Payments Are Reported:
- The law only allows for the reporting of complete, on-time rent payments. Missed or late payments are excluded from this type of reporting.
- This law is a step toward helping renters build credit based on consistent, responsible rental payment history.
Source: California Legislative Information – Civil Code Section 1954.07