If you can believe it, back in 2014, credit agencies began accepting rent payments to measure a tenant’s credit score. It seemed to have a slow start, but since California passed SB-1157 in July 2021, we are seeing more and more landlords offering this perk and many tenants asking for it. Still, many landlords do not offer rent reporting to help tenants improve their credit score.
A Brief Overview of California SB-1157
California lawmakers created SB-1157 with the objective of providing renters with limited income the opportunity to improve and build their credit score by reporting their rent payments. By reporting on-time rent payments to the major credit bureaus, renters can improve their credit scores without opening a new line of credit or taking out a loan.
This senate bill requires landlords of assisted housing developments with more than 15 units to give every new and existing renter the option to report their rent payments to a consumer reporting agency. To learn more about this senate bill, click here.
Why This Service Is Important For Both Landlords and Tenants
Even if you do not own subsidized rental properties, this service is still important to consider. Being in Sacramento, our units have housed many recent college graduates. Often, these new renters have little or no credit history and require a guarantor for their lease. Others who may need this service to boost their credit score include those who lost their job during the pandemic and had their credit score take a downturn. Students in your student housing rentals certainly could need this service to start their credit building sooner rather than later, and tenants who are restructuring credit after filing for bankruptcy could use this boost.
Ok, so why does this matter to you? You would not accept them anyway if they cannot qualify, right? So we are right there with you! However, we have had circumstances where we have had minimal movement on a vacancy. As mentioned above, we received an application from a recent grad with a parent willing to guarantee their lease. So to us, these tenants are even more secure because they are entering the real world and want to prove themselves, and their guarantor certainly doesn’t want to receive a call that they now have to cover the unpaid rent. If, when these recent grads were students, their landlord offered to help improve their tenants credit score by providing rent reporting, you could eliminate the need for the guarantor. It would show right there on their credit report, each and every rent payment, much like a credit card.