Credit History in Employment: Maryland Laws & Your Rights

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is the primary federal statute governing employer use of credit reports and credit information in employment decisions. Under the FCRA, employers must obtain written consent before obtaining a credit report from a consumer reporting agency, and must provide written notice and opportunity to dispute the report before taking adverse employment action based on the report.

The EEOC enforces the FCRA as it intersects with Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e. The EEOC has issued guidance stating that blanket policies denying employment based on poor credit history or credit scores may constitute illegal disparate impact discrimination if they disproportionately exclude protected classes (race, national origin, etc.) and are not substantially related to job performance or safety.

Federal law covers all employers with 15 or more employees. The FCRA allows employers to obtain credit reports for legitimate business purposes such as positions involving access to money, valuables, or sensitive financial information. However, even for these positions, employers cannot base decisions solely on credit information and must consider individual circumstances. Remedies under the FCRA include actual damages, statutory damages up to $1,000, punitive damages, and attorney's fees when a business willfully violates the statute.

Maryland Commercial Code § 14-222 establishes state-level restrictions on employer access to credit reports that are comparable to, but complementary with, federal FCRA requirements. Under Maryland law, an employer may not obtain a credit report on a job applicant or employee unless: (1) the applicant or employee provides prior written consent; (2) the employer has a legitimate business purpose for obtaining the report; and (3) the employer complies with all FCRA requirements.

Maryland law is broader than federal law in certain respects. While the FCRA applies only to reports obtained from a "consumer reporting agency," Maryland's statute potentially applies more broadly to credit information regardless of source. Additionally, Maryland law explicitly protects job applicants, not just current employees, and applies to all employers in Maryland with at least one employee—there is no 15-employee threshold as under federal law.

Under Maryland Commercial Code § 14-216, before an employer takes adverse action against an applicant or employee based on information in a credit report, the employer must provide the individual with a copy of the report and written notice of the right to dispute inaccurate information within 30 days. If the individual disputes the information, the employer must wait until the dispute is resolved or until the individual's right to dispute expires before making a final employment decision based on that information.

Maryland also recognizes common-law claims for invasion of privacy and breach of confidentiality if an employer obtains credit information improperly or uses it in an unauthorized manner. State law does not carve out exceptions for positions involving financial access the way federal law does, making Maryland's standard more protective.

Remedies under Maryland law include actual damages, punitive damages (in cases of willful violation), lost wages, and attorney's fees. Employees can pursue claims in Maryland state court under state law independently of or in addition to federal FCRA claims.

Maryland law permits employers to obtain credit reports if the job involves access to money, valuables, or sensitive financial or security information—however, even in these cases, written consent and legitimate business purpose are still required, and credit information alone cannot be the basis for employment decisions. Employers may also obtain credit information as part of a legitimate background check for positions in financial institutions or law enforcement, but must still comply with notice and dispute procedures.

Small employers with fewer resources may not be subject to the same standard of care, but Maryland law does not explicitly carve out exceptions based on employer size. Credit information obtained from public records (such as court judgments or bankruptcy filings) may be treated differently than reports from consumer reporting agencies, though employers must still use such information consistently and not in a discriminatory manner.

Under the EEOC's disparate impact doctrine, an employer's credit screening policy is not unlawful simply because it has a disparate impact on a protected class; however, the employer must demonstrate that the policy is substantially related to job performance or safety requirements. Employers cannot use credit information to discriminate based on race, national origin, color, religion, sex, age, disability, or genetic information—any such use is illegal regardless of legitimate business purpose.

At-will employment does not override credit discrimination protections. Even in an at-will employment relationship, an employer cannot make employment decisions based on credit information in violation of Maryland law or the FCRA. Independent contractors and unpaid volunteers may fall outside the scope of Maryland's statute, though the definition of "employee" is broadly construed.

Step 1: Document Everything. Keep records of all communications with your employer regarding credit checks, including email requests for consent, verbal mentions of credit screening, and any written job application forms that request credit authorization. Retain copies of any credit reports you receive, adverse action notices from employers, and correspondence about disputes. If you were denied employment or terminated, document the date, the reason given, and any statements about credit history influencing the decision. Photograph or save electronic versions of these documents.

Step 2: Understand the Internal Complaint Process. Many employers have HR departments that handle employee disputes or complaints about hiring/firing decisions. However, Maryland does not mandate an internal complaint process before filing a legal claim, so you are not required to complain internally first. That said, sending a written complaint to your employer's HR department (email or certified mail) creates a documented record and may resolve the issue without litigation. Frame your complaint clearly: "I believe my employment was denied/terminated in violation of Maryland Commercial Code § 14-222 because credit information was obtained without proper consent or used improperly." Keep a copy for your records.

Step 3: File a Charge with the Appropriate Agency. For FCRA violations or federal disparate impact claims, file with the Federal Trade Commission (FTC) at reportidentitytheft.ftc.gov or contact the EEOC at 1-800-669-4000 or www.eeoc.gov. You do not need to file with an agency before suing in Maryland state court for state law violations; Maryland does not require exhaustion of administrative remedies for credit discrimination claims. However, filing with the EEOC is free and creates an official record that can support a lawsuit. Provide the agency with: (1) your name, address, and phone number; (2) your employer's name and address; (3) the date the violation occurred; (4) a detailed description of what happened (e.g., "employer obtained credit report without written consent"); (5) copies of the credit report, adverse action notice, and any consent forms or lack thereof; (6) names and contact information of witnesses.

Step 4: Understand the Investigation Process. If you file with the EEOC, the agency will send a copy of your charge to your employer, who then has 30 days to respond. The EEOC will then investigate, which typically takes 60–180 days depending on caseload. During investigation, the EEOC may request documents from both you and your employer, conduct interviews, and review the credit report and adverse action procedures. You may also file a complaint with the Maryland Attorney General's Consumer Protection Division at marylandattorneygeneral.gov. The FTC does not investigate individual complaints but uses data to identify patterns of violations. Expect correspondence from the investigating agency; respond promptly with requested documents.

Step 5: Consult an Attorney and Decide Your Next Steps. If the agency issues a "Right to Sue" letter (EEOC) or if 180 days pass without resolution, you have the right to file a civil lawsuit in federal or state court. Contact an employment law attorney in Maryland who specializes in discrimination and FCRA claims. Most offer free consultations. An attorney can evaluate the strength of your case, negotiate with the employer on your behalf, and represent you in court if necessary. You have up to 2 years from the date of the violation to file a federal FCRA lawsuit (or 5 years for willful violations) and generally up to 3 years for state law claims. Attorney's fees and court costs may be recovered if you prevail.