Two New Maryland Laws Impact Information in Consumer Credit Reports

The Maryland Office of Financial Regulation is providing guidance on two legislative changes that protect criminal record history and limit the use of older information in consumer reports.

The first new law, HB 622, restricts the types of criminal background information that companies may post to consumer reports, and the second, SB 41, limits the existing exceptions to when businesses may consider information that normally disappears from a credit report over time. Both laws are effective on October 1, 2024.

What do the new laws prohibit from appearing on a consumer report?

HB 622 prohibits a consumer report from including any criminal charge where the consumer was falsely accused, acquitted or exonerated; received a nolle prosequi; was not found guilty nor pled guilty; or that was later expunged. For additional issues related to this topic, please see: FAQs for the Consumer Reporting Law.

SB 41 raised a dollar threshold related to specific exceptions allowing a business to consider information that otherwise disappears from a consumer credit report. Negative information typically disappears from consumer reports after either seven or ten years. Current law specifically disallows businesses to consider bankruptcy discharges after ten years, or civil suits and judgments, tax liens, charged-off accounts, and any other adverse item after seven years, unless a consumer applied for a loan or insurance policy of $50,000 or more or employment of $20,000 or more.

Under the revised law, the otherwise-expired information may only be revealed through a consumer report if the consumer applies for a loan or insurance policy over $150,000 or a job that pays more than $70,000 per year. This change limits the circumstances under which the exceptions may be considered in consumer credit decisions.

What are the penalties?

Any violation of the law is considered an Unfair, Abusive, Deceptive Trade Practice as defined in Md. Code Ann., Fin. Inst. § 2-113.1 as well as a violation of FI § 14-1226 and carries the penalties outlined in Md. Code Ann., Com. Law § 14-1226 (b)(1) which include potential fines of up to $10,000 for the first violation and $25,000 for each subsequent violation.