SB 267: California’s New Rules for Voucher Applicants and Credit Reports
California tightened fair housing rules again with SB 267, which became law on January 1, 2024. This law makes it illegal for landlords to use credit scores alone to deny housing voucher applicants.
At Mission City, we often hear: “What if their credit isn’t good enough?” Under SB 267, that is no longer a valid reason to reject someone with a voucher.
1. What SB 267 Says
If an applicant uses a housing subsidy (Section 8, HUD-VASH, ERAP, etc.):
You cannot automatically deny them based on a low credit score.
You must give applicants a reasonable chance to show other proof they can pay their share of rent.
This proof could include:
A history of on-time rent payments
Utility bills paid on time
References or other reliable income documentation
📌 Source: SB 267 amended California Government Code § 12955, the same fair housing section updated by SB 329. (California Legislature)
2. Why It Matters for Tenant Screening
Before SB 267, many landlords used credit scores as a quick cutoff. Now:
You must look at the tenant’s whole picture, not just a number.
You can still screen for ability to pay their share — but you must consider alternative evidence if credit is weak.
Ignoring this rule = a violation of California’s fair housing law.
👉 Example: Rent = $2,400. Voucher covers $2,000. Tenant’s share = $400. Even with a low credit score, if they can show proof of paying $400-level expenses reliably, you cannot reject them just for poor credit.
3. Penalties for Violating SB 267
Violations are enforced by the California Civil Rights Department (CRD) under FEHA. Penalties may include:
Civil fines
Tenant damages and attorney’s fees
Court-ordered policy changes
📌 Settlements in housing discrimination cases have reached $90,000–$280,000.
4. Why This Matters in Santa Barbara
Voucher use is growing locally. Ignoring SB 267 risks legal trouble and can also harm your reputation.
Mom-and-pop landlords may fly under the radar.
Professional landlords and property managers are often secret-shopped to test compliance.
Compliance is not optional for companies like Mission City.
5. Mission City’s Compliance Standard
To protect owners and tenants, Mission City:
Screens voucher applicants only on their share of rent.
Accepts alternative proof when credit is weak.
Does not allow owner instructions that conflict with SB 267.
This ensures full compliance with California law.
6. Our Take on SB 267
We know this law is frustrating for landlords. SB 267 creates a divide:
Non-voucher applicants still go through strict credit and leasing standards.
Voucher applicants can bypass those standards if they provide alternative proof.
This can feel unequal — and in some ways, it is.
But our job as a professional management company is to protect owners from risk by following the law exactly as written — even when we don’t agree with the policy direction.
Whether or not we agree, SB 267 is the law. And ignoring it can expose landlords to serious fines, lawsuits, and compliance audits.
Key Takeaways
SB 267 (effective Jan 1, 2024): you cannot reject voucher applicants based only on credit.
Landlords must allow reasonable proof of ability to pay.
Violations are enforced by CRD with steep penalties.
Mission City applies this law consistently to protect owners and keep leasing professional.
