California’s Assembly Bill 2747, set to take effect on April 1, 2025, is on track to transform how renters‘ credit histories are built. The bill, which Governor Gavin Newsom signed into law last year, requires landlords to offer tenants the option to have their on-time rent payments reported to credit bureaus. This change addresses a critical issue: many renters have been unable to build credit as their rent payments have never been included in their credit reports.
Renters, particularly in high-demand and expensive housing markets, often face significant hurdles in establishing the credit needed for financial growth. The average rent in California is about $2,700, nearly 38 percent higher than the national average, according to market data. Without a strong credit score, it’s difficult to secure affordable loans, qualify for better rental housing, or access other financial opportunities. The new law aims to fix this by recognizing rent payments as a valid sign of financial responsibility, much like paying a mortgage or car loan. Given that rent is often one of the largest monthly expenses, the ability to have timely payments reported could significantly boost renters’ credit scores and create more opportunities for homeownership, better loan terms, and financial stability.
However, the success of AB 2747 relies on landlords adopting the systems required to report rent payments. This is where technology comes in. An increasing number of private sector online platforms provide landlords with an easy way to help tenants opt into the rent-reporting program. These tech solutions require minimal effort from landlords while ensuring compliance with the new law, without disrupting day-to-day operations. By automating the process, these services can help bridge the gap between legislative goals and real-world implementation, benefiting both tenants and landlords.
The growing use of technology in the housing industry reflects a broader shift toward more efficient and accessible solutions. The rental market has traditionally been slow to adopt new tech compared to other sectors, but demand for tools that improve the rental experience is rising. From streamlining rent payments to facilitating digital leases and online tenant screenings, technology is changing the way renters, agents and landlords interact, making it easier to implement essential practices like rent reporting.
For tenants, the ability to build credit through rent payments presents a valuable opportunity to lessen financial instability. Renters without a credit history often have limited access to financial products such as loans and mortgages. By incorporating rent payment data into credit reports, this new California law opens the door for renters who have been excluded from the credit system. Research from the Federal Reserve has shown that renters, especially in communities of color, often lack sufficient credit history to qualify for traditional financial products, which can block their path to homeownership and financial security. The new law can helpl provide a way for those renters to build their credit scores, helping to level the playing field and create a path toward financial independence.
The law could also promote better financial habits among renters. Research has shown that knowing that timely rent payments will impact renters’ credit reports can encourage them to stay on top of payments and reduce the risk of late payments or evictions. In turn, landlords can benefit from tenants who are more financially stable, leading to improved tenant retention, fewer late payment disputes, and a more reliable rental market overall.
Beyond the individual benefits, this new California law has the potential to reshape the rental market as a whole. However, challenges remain. Landlords, especially the immense mom-and-pop segment – individual landlords own about 41 percent of rental listings in the U.S. – will need ongoing support to adopt the necessary technology and ensure they can easily integrate rent reporting into their operations. Both tenants and landlords will also need education about the law’s benefits and how to navigate the reporting process. As other states consider following California’s lead, it will be crucial to ensure that tech solutions are affordable, accessible, and scalable for landlords, while also ensuring tenants understand how to opt into the program.
Michael Lucarelli is the CEO of RentSpree.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: zeb@hwmedia.com.
