Startup’s nuanced background check helps ex-offenders get jobs

Excerpted from a Forbes story by Anne Field

The cards clearly are stacked against formerly imprisoned inmates once they try to re-enter the mainstream. Employers often simply won’t hire ex-offenders, while many states restrict the business and professional licenses that once- incarcerated people can get. So it’s no wonder that, according to research, about two-thirds (67.8%) of released prisoners are arrested for a new crime within three years.

Those appalling numbers led criminal justice advocate Teresa Hodge to seek a more-nuanced alternative to the traditional background check. Launched in 2017, her Baltimore-based startup R3 Score has a platform that aims to provide prospective employers, as well as banks, landlords and others, with a more accurate way to assess the potential riskiness of applicants with a criminal record.

According to Hodge, 8 out of 10 employers run criminal background checks when considering candidates. Even in places with ban the box legislation, such investigations are common. Often the information is just plain wrong; over 40% of records in the FBI data base are incorrect, according to Hodge. But, in any case, if an employer finds a candidate has a record, even if it’s from years before, that generally ends the person’s chances of getting hired.

With that in mind, Hodge decided what was needed was a more in-depth and nuanced evaluation. Something, she says, “that gives you information about who the person is today, rather than being locked into the worst mistakes you ever made.”

R3’s software assesses criminal records, as well as credit histories, employment experience and information self-reported by individuals, and produces a numeric indicator for each individual predicting future trends. Scores run from 300 to 850, to mimic the standard framework for conventional credit histories. The higher the number, the less risky the person.

Hodge got the idea while working on a project for Mission: Launch, a nonprofit focused on helping people with arrest or conviction records, that she founded in 2012. In 2016, a community-oriented bank asked if her organization could vet a loan candidate with a criminal record. “They didn’t know to assess her,” she says. For the next three days, Hodge and her colleagues (including her daughter, Laurin Leonard, who is COO of R3 Score) looked for what tools existed that could help with the assignment. They ended up finding nothing. So, they created a list of factors to take into consideration. Hodge, who also had worked as a loan officer and in HR departments, had a pretty solid idea of what was needed. Three days later, they created a framework.

The analysis revealed that the individual was still a credit risk. But it also taught Hodge a lesson. “No one is going to spend three days trying to vet a single person,” she says. “I recognized that it would be just easier to say no. But no one should be a no forever.” With that insight, she decided there could be a market for an efficient technology platform that could do such an analysis for customers, much the way employers, banks and others use outside vendors to run credit checks on applicants.

Over the next two years, Hodge worked on developing the tool. The company is now testing it out on a database of 100 people with arrest or conviction records and also is working with two Community Development Financial Institutions (CDFIs) and a startup to understand their needs better.

Hodge also just started in the current Techstars Impact Accelerator cohort. “We’ll be able to fine-tune what really works,” she says.