California Passes Landmark Legislation That Will Help Renter Get Credit for Paying Rent
Over 45% of Californians rent their home. However, unlike homeowners, renters do not benefit from having their positive rental payments reported to the national credit bureaus, and often, only the negative information is reported. This lop-sided system of not reporting both negative and positive rental history is a missed opportunity. Luckily, with the passage of SB1157 in October 2020, California is seizing the opportunity to help renters get credit for their rental payments.
SB1157 is a first in the nation bill requiring landlords who receive local, state or federal housing subsidies to offer their residents the option of having their rental payments reported to a major credit bureau. Rent reporting is a proven strategy that helps renters improve their credit. Through its Power of Rent Reporting pilot in partnership with Experian Rent Bureau and eight affordable housing providers, Credit Builders Alliance found that 100 percent of residents that started off with no score became scorable, and on average, residents saw their credit score increase by 23 points. Similarly, NYC’s Office of the Comptroller found that through rent reporting, 29 percent of NYC renters would gain a credit score and 76 percent of tenants would experience a score increase. By focusing on assisted housing, SB1157 will reach residents who have potential to receive the greatest benefits from establishing or improving their credit scores, specifically people of color and low-income households.
- SB 1157 requires landlords who manage multifamily residential units in California that receive federal, state, or local subsidies to offer each tenant in a subsidized unit the option of having their rental payments reported to the credit bureaus. It goes into effect on July 1, 2021.
- Landlords of dwellings with less than 15 units are exempt, with some exceptions.
- Landlords must provide information about rent reporting and how to opt-in at the time of lease agreement and then at least once per year (the bill has some stipulations on how landlords should do this, what information must be provided, and when they can accept an opt-in from new tenants).
- Residents may opt in and opt out of rent reporting at any time.
- The bill protects tenants who may make deductions or withhold rent in accordance with their rights. These would not constitute a late payment.
- Acknowledging that there may be a cost to reporting, landlords can cover the costs or charge residents the lesser of $10 or the actual cost of the service.
Credit Builders Alliance, a national nonprofit, is providing technical assistance to landlords preparing to comply with SB1157. For those seeking to learn more about rent reporting and how to navigate implementation, we encourage you to reach out to us at [email protected].
 US Census’s American Community Survey
 Chenven, Sarah and Carolyn Schulte. (2015). The Power of Rent Reporting Pilot. Access the report here.
 Stringer, Scott. “Making Rent Count: How NYC Tenants Can Lift Credit Scores and Save Money, Making Rent Count: How NYC Tenants Can Lift Credit Scores and Save Money”, New York, NY. Office of the Comptroller, 2017. https://comptroller.nyc.gov/reports/making-rent-count/rent-and-credit-report/.
This article was originally published in March 2021 and will be updated as new information on SB1157 becomes available.