What you need to know about what different types of background checks show and when to use them.
Background checks provide crucial insights to help organizations make informed decisions about hiring, tenancy, credit, and insurance. Understanding the data in different types of background checks is the first step to selecting the most relevant screenings for your business needs.
What is a background check?
A background check is the process of gathering information about an individual to assist in decision-making. Background checks have four main functions:
- Employment background checks: These checks provide information about a job candidate’s history. Employers use them to identify factors that may disqualify a candidate from a specific role.
- Tenant background checks: Tenant checks reveal a prospective tenant’s criminal and financial history. Landlords and property management companies use this information to decide whether to rent to an individual.
- Credit background checks: These checks focus on financial information. Banks, credit card companies, mortgage lenders, and other creditors use the data to evaluate the risk of extending credit to an applicant.
- Insurance background checks: Insurance checks gather information about an applicant’s history. Similar to credit background checks, this type of background screening is useful for risk assessment.
What comes up in a background check?
The information revealed in a background check depends on the type and scope of the background screening. Organizations can choose from several screening options based on the information they need to make informed decisions or assess risk. Here’s a look at what may come up in the most common types of background checks.
Criminal Background Check
Also called a criminal history check, a criminal background check identifies felony and misdemeanor convictions, pending cases, and, in some cases, active warrants, arrests, and infractions or violations that didn’t result in jail time.
The scope of criminal background checks varies:
- National criminal background check: Searches national, state, and county databases for relevant criminal records.
State or county background check: Focuses on the state or county level. - Federal background check: Accesses the Public Access to Court Electronic Records (PACER) database for offenses committed in federal jurisdictions.
- Global watchlist search: Checks whether an individual’s name appears on the Office of the Inspector General (OIG)’s exclusion list, the FBI and Interpol’s most wanted lists, and other watchlists.
Sex Offender Registry Check
A sex offender registry check determines if an individual appears on a sex offender registry. Usually, this type of background screening includes searches of the National Sex Offender Registry, sex offender registries of all 50 states, and those maintained by U.S. territories and tribes. Often, a sex offender registry check occurs in tandem with a criminal background check, but it can be conducted independently as well.
I-9 Verification
An I-9 verification confirms whether an individual can legally work in the U.S. United States Citizenship and Immigration Services (USCIS) requires all employers to perform an I-9 verification for every person they hire in the U.S. To comply with this requirement, employers and employees must complete Form I-9. The process involves examining documents that verify identity and employment authorization.
Employment Verification
This check confirms a candidate’s employment history on a job application, tenant screening application, or resume. It typically includes position or title, employment dates and status, and may also provide additional information, such as salary and job duties performed.
Typically, the first step is to access The Work Number, a database that provides employment records for more than 3.8 million employers. If records are not available, employers may be contacted directly.
Education Verification
Education verification confirms the accuracy of a candidate’s educational history, such as enrollment status, attendance information, degree obtained, major or program of study, and graduation date.
Typically, the process begins with a search of the National Student Clearinghouse, which includes records for 97% of students enrolled at public and private institutions, and 87% of secondary school students in the U.S. Schools may be contacted if records are unavailable.
Motor Vehicle Records Check (MVR)
An MVR check reveals details about an individual’s driving history, including their driver’s license class, current status, and convictions for moving violations. This information usually comes from the state Department of Motor Vehicles where a candidate has lived.
Credit Report
A credit report, or credit background check, shows how a person has used credit. Standard details may include credit-to-debt ratio, payment history, tax liens, accounts in collections, and bankruptcies.
What causes a red flag on a background check?
The factors that cause a red flag on a background check depend on the organization’s policies, the type and purpose of the background check, the nature of the position, and other specific criteria. Common red flags from each of the following sources include:
- Criminal background check: Felony convictions or other serious offenses.
- Education or employment verification: Falsified information, such as fabricated degrees or work experience.
- MVR check: Driver’s license suspensions or a history of traffic violations
- Credit background check: Multiple delinquent credit accounts, bankruptcies, or high debt-to-credit ratios.
In some cases, federal, state, or local laws may disqualify an individual from employment based on certain background check results. For example, the Federal Motor Carrier Safety Administration (FMCSA) requires CDL drivers to be disqualified for employment if they have a history of specific traffic violations, such as a DUI, leaving the scene of an accident, or operating a commercial vehicle with a revoked, suspended, canceled, or disqualified CDL.
How far back do background checks go?
The lookback period for background checks varies, but most look back over a seven-year period. Some types of information may be accessible for 10 years or more. In the case of an education verification, the background check usually verifies the highest credentials a candidate earned. Similarly, an employment verification focuses on the most recent employer or positions relevant to the role.
Does a background check show information for all states?
Whether a background check shows information for all states depends on the scope of the background screening process. National criminal background checks and sex offender registry checks typically access records from all 50 states. On the other hand, driving records checks usually focus on the state that issued the individual’s current license and states where they previously held licenses.
What does not show up in a background check?
Background checks do not include personal information not recorded in official databases or records restricted by laws and regulations. Specific types of information that typically do not appear in a background check report include:
- Expunged criminal records
- Sealed criminal records
- Juvenile criminal records
- Minor infractions and violations
- Social media information
- Marriage records
How long do background checks take?
The time it takes to complete a background check varies, but the industry standard turnaround time is around three to five days. Delays may occur if records aren’t accessible online, follow-up is necessary, or a candidate provides incomplete or incorrect information.
How much do background checks cost?
The cost of background checks varies depending on the type, scope, and other factors. Organizations that perform a high volume of background checks on a monthly basis can qualify for bulk discounts that reduce the costs associated with the background screening process.
Legal considerations for background checks
Organizations conducting background checks for renters, hiring, insurance, or credit must navigate legal considerations to ensure compliance. Your legal counsel can provide detailed guidance on complying with background check laws, but here’s a quick overview of relevant laws and regulations.
Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act (FCRA) is a federal law that protects consumer information. Under the FCRA, organizations partnering with a credit reporting agency (CRA) to perform a background check for insurance, tenancy, credit, or employment must disclose their intent to run a background check in writing and obtain written authorization from the consumer.
If the information in the background check report leads to an adverse action, such as rejection of a rental application or disqualification from employment, organizations must follow an adverse action notification process and allow the candidate to dispute the findings.
State background check laws
Some states extend protections beyond the scope of the FCRA. For example, California’s Fair Employment and Housing Act (FEHA) prohibits housing providers from considering certain criminal records, such as arrests that didn’t lead to a conviction and minor infractions, when determining whether to accept a tenancy application. State laws may also limit the lookback period for background checks or prohibit employers from running a background check until after extending a conditional offer of employment.
Ban the Box laws
Currently, 37 states and over 150 local jurisdictions have passed Ban the Box laws. These regulations prohibit employers from asking about criminal history on a job application and often require employers to wait until later in the hiring process to run background checks.
