In 2020, Maryland passed the HOME Act to prohibit landlords from rejecting renters based on whether they use housing vouchers. Now, by passing HB 315/SB 335, the state has taken another important step to protect low-income renters. Under the new law, landlords are also prohibited from rejecting voucher holders based on their credit scores.

Housing applications are complex. Landlords often purchase information about renters not only through credit reports, but through tenant screening reports, which provide credit scores, proprietary tenant scores that claim to quantify tenant risk, rental recommendations, and records from criminal and civil courts. But despite all that information, credit scores continue to be a deciding factor for many renters.

That is unfortunate because credit scores can create discriminatory barriers to housing, particularly for people using housing vouchers. Credit scores are only designed to predict credit risk and rarely include information about a person’s history as a renter. They are not predictive of whether someone will be a good tenant. Yet, credit scores are widely used by landlords.

The problems with using credit scores in this way are particularly obvious when applied to renters using housing vouchers. These renters are in many ways low risk tenants. Most of their rent is guaranteed by the government and rigorous screening prior to receiving the voucher ensures that they are able to cover the remaining amount. If the renter’s ability to pay changes, their government assistance adjusts to make up the difference. And housing voucher holders are often good tenants, with some studies finding that they on average have longer periods of tenancy and lower eviction rates. But tenants with vouchers are also more likely to have low credit scores. As a result, credit screening unjustly restricts housing access for these tenants—who are disproportionately Black, female, and disabled—without regard to their ability to pay. Under HB 315/SB 335, this type of screening is recognized as a form of illegal discrimination.

What Does the Bill Do?

HB 315/SB 335 does three things to protect renters receiving housing vouchers. First, it prohibits landlords from refusing a potential tenant’s rental application based on their credit score (or lack of credit score). Second, it prohibits landlords from refusing a potential tenant’s application based on bad credit history from a period when the renter was not receiving housing assistance. Finally, it only allows landlords to consider a potential tenant’s income with respect to the portion of the rent not covered by the housing subsidy (usually 30% of the rent). The landlord cannot turn a potential tenant away merely because their overall income is low.

Importantly, the language used in the bill is that landlords may not reject an application from a voucher-holding applicant “on the basis of” any of these types of information. That means that potential tenants do not need to prove that their credit score, for example, was the only reason they were rejected. They just need to show that their credit score was one of the reasons they were rejected. This broad reach of the bill’s language helps somewhat with one of its oversights: it does not apply directly to the proprietary tenant scores that are provided as part of tenant screening reports. Such scores are almost invariably presented alongside credit scores and incorporate them, so any decision made on the basis of a tenant score would generally trigger the law’s protections regardless.

Rights for Renters

HB 315/SB 335 makes any of the prohibited actions outlined above a “discriminatory housing practice.” Therefore, any voucher holder who believes they have been discriminated against can file a complaint with the Maryland Commission on Civil Rights (“MCCR”). If MCCR reaches a resolution, or if 130 days have passed without resolution, the renter can also file in court. Landlords in violation of the law may be subject to punitive damages, injunctions, and required to pay attorneys’ fees and costs for the tenant.

The law also provides tenants with a new option for improving their credit score. It requires that landlords offer to report positive rental payment history to credit bureaus. Credit scores usually do not include this history. For many with low credit scores, inclusion of their history of paying rent on time can notably improve their score.

Finally, though not a right provided by HB 315/SB 335, renters should know that landlords are required to provide notice if they reject an application based on any consumer report, which includes both credit reports and tenant screening reports. Though many landlords fail to comply with this federal right, it provides an important route for challenging a rental decision and learning about the information that went into it.

Though there is still a long way to go in eliminating source of income discrimination in Maryland, HB 315/SB 335 adds a new tool to an important ongoing legal fight. The bill marks another important legislative step toward a more equitable housing market.

If you believe you or someone you know has experienced housing discrimination, please contact us today.

This blog was primarily authored by BGL summer associate Kyle Kunkler. At the time of publication, Kyle is a rising fourth year evening student at Georgetown Law. He is a Tech Law Scholar and a Staff Editor of the Georgetown Law Technology Review. Last summer, he was an intern with Legal Aid DC’s consumer law unit, where he worked on behalf of low-income clients facing debt collection and foreclosure. The summer before that he was an intern with the Transaction Records Access Clearinghouse, where he researched affirmative disclosure obligations under the Freedom of Information Act.