Maryland bill could make credit scores less important for some renters

Maryland lawmakers are considering barring landlords from weighing credit scores during the screening process for some tenants using housing vouchers.

The bill has support from housing voucher providers and recipients who say credit scores are a “backdoor” way to discriminate against low-income people, a violation of state law. Landlords and their lobbyists, meanwhile, argue the proposal would make it even more difficult for landlords to select tenants during a nationwide housing shortfall.

It’s the latest attempt to expand renter protections, and it could benefit tenants with past financial stumbles. But opponents warn it could prompt landlords to add more requirements to applications, restricting access and increasing the cost of housing.

The Maryland House of Delegates and Senate have each voted to advance the bill with amendments. The two chambers will need to work out the differences and settle on identical versions before sending it to the governor.

The bill applies to prospective tenants who hold housing vouchers: subsidies from governments or nonprofits that help cover their rent. Those subsidies are designed to allow more people the opportunity to move to communities with better access to schools, jobs and transit.

Though landlords can’t legally deny a lease to someone on the basis of their housing voucher alone, voucher holders report having difficulty finding decent places to live — often due to their credit history.

“It really is a proxy landlords use for the likelihood of a tenant’s ability to continue to pay rent,” said Jason Cherubini, a researcher at Loyola University Maryland’s Sellinger School of Business.

Credit scores have become analogous to how standardized tests are used to assess college applicants, Cherubini said: “An objective component, with other components to balance it out.”

Some landlords won’t consider tenants with credit scores below a minimum threshold, such as 610 or 620. Scores are largely determined by a person’s past borrowing history, how much credit they use and the mix of lending sources, such as loans and credit cards.

The amended bill would ask landlords to consider a person’s credit score only from the time they began holding a housing voucher. Tenants, housing authorities and other issuers would be tasked with providing voucher start dates to landlords. If a landlord cannot access that information, they could still consider credit scores.

The bill would allow the Maryland Commission on Civil Rights to review credit screenings as discriminatory.

Sponsors Sen. Sara Love and Del. Vaughn Stewart, both Montgomery County Democrats, said during public hearings in Annapolis that the bill intends to allow voucher holders a better shot in a tight housing market.

Voucher recipients sometimes spend years on waitlists. They only receive a coveted subsidy after being carefully scrutinized for their fitness to rent and abide by lease agreements.

“This may not shock you, but voucher holders have crappy credit scores,” said Stewart, who also works as a housing attorney for low-income clients.

At the same time, he said, “most voucher holders are really good damn tenants, who have already been verified and have the rent.”

One such tenant, Mandee Crumpton, said her credit score nearly tanked her housing search a few years ago.

Crumpton, who lost her job as a nursing assistant during the pandemic, said her finances took a hit as she struggled to keep her household afloat. When her Howard County lease ended and she began applying for a new one, she realized having a voucher didn’t necessarily guarantee her the stability she craved.

“It was just deny, deny,” Crumpton said about her housing search.

Her new Anne Arundel County apartment, in the shadow of Baltimore-Washington International Thurgood Marshall Airport, has everything Crumpton wanted for her son: a good school, where he plays sports and takes vocational courses; quiet streets and sidewalks; and a clean, spacious home they can decorate and make their own.

As a little boy, Crumpton’s son witnessed violence in their Baltimore neighborhood, and it inspired her to seek a new environment for him. She has at times juggled multiple jobs, and over the last year she completed a software engineering program in an attempt to change careers.

But in a rapidly changing economy, Crumpton said she’s finding it difficult to secure an entry-level position. It makes her voucher, which guarantees at least a portion of her rent, all the more essential, she said.

Opponents of the credit score bill in Annapolis acknowledged that voucher holders offer benefits to landlords, such as being pre-screened. But they lamented the potential loss of the ability to evaluate credit scores, citing it as an added layer of protection during the tenant search.

William Castelli, an attorney and lobbyist who testified against the measure on behalf of Maryland Realtors, said landlords’ objective is to find the “best” tenant, regardless of whether the person has a voucher or not. Others said the bill complicates what should be a relatively inexpensive and straightforward process.

“I’m offended that looking at someone’s credit score is discriminatory,” said state Sen. Mike McKay, a Western Maryland Republican as well as a landlord. “It’s a sliding slope to take out credit scores. What’s going to be next? It’s an all-out assault on landlords.”

Cherubini, the Loyola University Maryland researcher, said in the absence of credit scores landlords would likely double down on other metrics, such as a person’s income or ability to pay a high security deposit.

A landlord who spends more time screening tenants for fitness, Cherubini said, may also demand more rent for any time lost. That, he said, could make the rental market even more exclusive.

That said, vouchers almost entirely remove the “repayment risk,” he said, rendering a person’s credit history largely moot. Cherubini said credit scores for voucher holders should at least be “devalued.”

“It measures your responsibility to your paying back, but it’s not a judgment of character,” he said, “and not a measure of how good of a tenant you could be.”