What is a Background Check?

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Posted by: David Garcia August 19, 2020

The purpose of pre-employment background checks is to gather information about a candidate’s history to determine if they pose a risk to your workplace as well as confirm their education and employment history. Whether it’s a criminal background check, employment history verification, or reference checks, these different components all play a role in the on-boarding process.

Past offenses in criminal history don’t always inform future actions. However, background checks during the hiring process are still relevant because they paint an overall picture of someone’s personal and work history.

Background checks consist of several components based on which job a candidate is applying for. They typically consist of three parts:

  1. Criminal background checks
  2. Employment background checks and credential verification
  3. Ad hoc services, such as drug testing or driving records searches

To set up a background check, work with a company specializing in background checks. It will help you design a comprehensive program that works for your business.

Background check reports consist of different components, so there are a multitude of different types of checks. This article will help you understand ten types of background check components so you can design the best pre-employment background checking program for your company’s needs.

The Basics of Background Checks

To understand background checks, you should know the factors to consider when creating employment screening guidelines:

  • Reporting History. Reporting history is the length of time something adverse can appear on a background check. According to the FCRA, seven years is the standard for convictions and dismissals.
    After seven years, charges and dismissed cases aren’t allowed to be reported on background checks or credit checks. Consult your attorney or background check company to create a timeline. Again, seven years is the standard, so go with that to remain compliant with the FCRA.
  • Residence History. Residence history is the number of addresses that a candidate has lived over a period. The information is used by background check companies to find counties to look for criminal records. Many companies choose a current address or their primary residence for the seven years prior.
  • Names & Aliases. Names & Aliases are the names that a background check company searches. Name changes are typically due to marriage (like maiden names and married names) or nicknames (for example, Bill or Billy).

Legally, employers can choose not to hire someone because of background report findings. However, it is illegal in cases where the employer makes decisions based on race, color, sex, religion, national origin, genetics, age, or disability. Denying employment based on a background check is called taking adverse action – to learn more about this, check out our article on the adverse action process.

Employers can also seemingly treat all their employees the same, but use criminal background checks as a means of illegal discrimination-clunky sentence, what are we trying to say here?. For example, employers should not adopt a policy that excludes people who have a criminal history if it primarily disadvantages people of a specific race or origin.

Employment background checks usually happen when a person applies for a job. They can also occur whenever the employer thinks it’s necessary. For example, some employers require annual drug tests or criminal background checks.

To run an employment background check or pre-employment screening, you need the candidate’s information:

  • Full name
  • Birthday
  • Social security number
  • Current or past addresses
  • Consent

Note: It’s not uncommon for candidates to be wary about handing over sensitive information like their social security number. However, keep in mind that this does not mean that they’re reluctant to cooperate in an employment history check. They may have had a negative experience giving their social security number to a potential employer in the past. You want to ensure your background check provider has security certifications such as a SOC2.

10 Types of Background Check Components You Should Know About

There are ten types of background check components, each designed to fulfill a specific purpose.

Here’s what you should know about every kind and what situation it is best used in.

1. Social Security Number Trace

A social security number (SSN) trace uses the national credit bureaus to verify whether the candidate’s SSN is valid, and that it matches their legal name, nicknames, aliases, and associated residences on file. It also checks for matches in counties that the person previously resided or worked and financial transactions they made there. It can be used to direct criminal record searches at county-level.

Social security number tracing is important to determine whether the SSN is valid and matches the name and birth date provided by the candidate. It can also inform where further searches are necessary and unearth additional information about the candidate to be researched. If they previously were known by other names, such as a maiden name, it can bring forth information linked to that name that may be missed by other verification checks.

Important things to know about SSN traces:

  • It should not be used as the sole background check – SSN traces are used to ensure the effectiveness and accuracy of other checks. It should not be used to inform an employment decision or the choice to take adverse action.
  • It does not verify green cards or non-domestic statuses.
  • It is not a credit check in itself – it will not provide any credit scores.
  • If the person has limited credit history or has only just been assigned an SSN, the trace may not produce any results.
  • It does not necessarily verify that the person is who they say they are or guarantee their identity. The check verifies whether the SSN, name and date of birth match those given by the candidate, but if that identity is stolen, the check results may be clear.

If a trace does not match the candidate’s given details, it will return an alert. Note that sometimes this occurs because the person mistyped their SSN. The trace should then be re-run with the correct number.

2. Employment History

Employment verification checks are to verify that the person held the previous job roles listed on their resume, for the length of time suggested by their resume. These checks verify the candidate’s former job title and their dates of service by contacting the former employer.

Through calls, emails, and faxes with the former employer, an employment verification check will ascertain whether there are any discrepancies between the candidate’s resume and the information provided by their previous boss. The check can flag up:

  • Discrepancies of a month or more between candidate reported employment dates
  • The candidate’s reported salary differs from the verified salary
  • Whether the candidate left their former workplace on bad terms and why
  • The candidate’s job title differs from their verified title

Note that an employment verification cannot confirm self-employment, provide the person’s entire history of employment, or include their actual salary information due to some state restrictions (it can only report if there is a discrepancy between the reported and true amount).

Employment background checks typically contain information from up to seven years ago. Some states allow you to perform audits of up to 10 years.

3. Credit History

Credit background checks are a record of an individual’s credit to debt ratio. It also shows how a person has managed their credit and bill payments previously.

Also referred to as credit reports, this type of background check is a standard requirement when applying for a credit card, home loan, car loan, etc.

A lot of landlords will also check credit reports to determine if a rental applicant has a good credit history.

Some jobs require a credit report check, especially in the financial or service industries where an employee will probably manage money.

A credit report shows the person’s full credit history, which includes:

  • Payment history
  • Tax liens
  • Credit inquiries
  • Unpaid bills
  • Bankruptcies
  • Civil judgments

Employers have to get written permission from candidates and tell them that information in the credit report background check could be considered while making employment decisions.

Again, the person must be sent copies of the report and “A Summary of Your Rights Under the Fair Credit Reporting Act.”

4. Driving Record or Motor Vehicle Records

Driving record background checks are conducted as a common part of employment verification checks if an employee’s job role involves driving a motor vehicle. Checking that an individual has a full clean driving license is essential for these roles to ensure the safety of road users.

Other than that, someone’s driving history can say a lot about them. If they have a DWI on their record, it can signal a reckless nature and disregard for others. If their license has previously been suspended, that can be another red flag.

There are several different kinds of driving record background checks that can be conducted, so if driving is integral to the role you’re hiring for, it’s worth running more than one on potential hires to ensure you’re bringing a sensible driver onto your team.

5. Criminal Records

Criminal background checks are used in situations where a person or company needs to be aware of criminal records or activities like violent crimes, embezzlement, felony convictions, if they are a sex offender, etc.

Depending on the industry, there might be specific regulations preventing a company from hiring felons if the conviction is relevant to the position. Employment screening helps employers uncover this information.

Formerly incarcerated individuals typically have a hard time reentering the workforce because of their criminal records. These restrictions make integrating into regular life challenging. To increase opportunities for the formerly incarcerated, the government gives incentives to employers who hire felons through the Work Opportunity Tax Credit program.

Criminal pre-employment background checks include these record searches:

  • National criminal databases
  • County criminal courts
  • Domestic/global watch lists
  • State and federal criminal records
  • Sex offender registries

Basic background checks and standard pre-employment screening procedures cover criminal history. Some services charge extra to search for aliases or searching state, county, and federal criminal records.

Quick Tip: For job seekers, when it comes to criminal history checks, it’s essential to be prepared if information like sex offender or assault charges appear. Candidates with a criminal record should be ready to explain their past and why it won’t affect their ability to perform on the job.

Applicants should always know their rights. If they aren’t hired during employment screening because criminal records are found during their background check, the employer must inform them verbally, in writing, or electronically.

The information should include:

  • Name, address, and number of the business that provided the report
  • A reminder that the company that gave the data did not decide to take adverse action and won’t offer you a specific reason.
  • A reminder that you can dispute whatever was found in the report, and you can obtain a free copy of the report from the company that provided it.

6. Education Verification

Education verification background checks ascertain whether a candidate’s resume is truthful and that they have earned the qualifications and attended the institutions that they said they did. These checks usually include verifying the highest degree or level of education completed by the candidate.

Unfortunately, it’s common for jobseekers to exaggerate or outright lie about their education, qualifications or achievements on their resume, so getting a thorough education verification check on potential hires is recommended. This ensures the person you hire can perform their role safely and properly.

7. Social Media Use

Searching an employment candidate’s name on social media sites like Facebook and Twitter can tell you a lot about them. Information gleaned from these websites can be used in the decision making process for hiring, and even in decisions to fire employees – but this can lead to discrimination issues. As well as this, crawling through candidates’ social media profiles can be time consuming work for hiring managers.

There are companies that can provide pre-employment screening for social media usage and online behavior that is compliant with anti-discrimination laws and the Fair Credit Reporting Act (FCRA). These services may also search the deep web, including pages that are inaccessible from the usual search engine results. However, any information found relating to protected class characteristics, such as religion, age, sex, race, disability status, sexual orientation, etc may not be shared due to federal anti-discrimination laws.

Job seekers should be wary of what they post online, as anything that could potentially harm their career could easily be found by potential employers. The best advice is to assume that everything you post is public, no matter what privacy settings you have activated.

8. Drug Screening

Some employers may wish to drug screen their employees, especially if their employment role involves driving, operating heavy machinery, or meeting with patients, clients, or the general public.

Other reasons to conduct drug testing on employees or potential hires include:

  • Deterring workers from abusing drugs and alcohol
  • Preventing the hire of people who use illegal drugs
  • Creating a safe working environment for colleagues
  • Protect the public/clients/patients who use your services
  • Complying with federal regulations and state laws
  • The ability to use Workers’ Compensation Premium Discount schemes

Pre-employment screening for drugs normally takes place after a conditional offer has been made. Applicants must then agree to a test. If they refuse or produce a positive test, they may not be hired. To avoid applicants being able to prepare for a test by stopping their drug use before their appointment, some employers choose to conduct unannounced testing, although some states prohibit this. The Americans with Disabilities Act (ADA) also prohibits pre-employment screening for the use of alcohol.

The results of drug testing can be considered as personal health information, meaning that employees or applicants must usually sign a release permitting their employer to access the results.

Companies like eScreen help provide access to drug screening providers all over the USA that can test for every type of drug. From there, candidates will be able to schedule their own screening at their leisure at a facility near them, taking the coordination aspect off of the employer’s plate.

9. Healthcare Sanctions

Healthcare sanction checks scan certain data sources to find out whether a candidate is barred from any federally-funded healthcare programs. This helps businesses to:

  • Remain eligible for federal medical programs like Medicare and Medicaid
  • Avoid OIG penalties, which can be up to $10,000 for every day that the excluded person worked at the company
  • Reduce any risk to staff, patients, and the business’s reputation

The results of these checks can include lists that the person has voluntarily added themselves to, and the name of the board or source that took any disciplinary action. It will also show whether the sanction is active or has ended, and the date it ended. The results are backdated seven years from the sanction’s end, or from today if the sanction is still active.

10. Civil Court Search

A civil court records search uses a national network of court runners to find the most up-to-date information on the candidate’s use of civil courts, especially in counties where records have not yet been digitized.

The check will show:

  • Small and large claims
  • Foreclosures
  • Debt collections
  • Liens
  • Civil domestic violence

The check does not include family law cases like custody disputes. It will also not show any criminal convictions.

These checks help employers by:

  • Informing their decision to hire qualified individuals
  • Safeguarding their assets
  • Ensuring they comply with legal and industry regulations
  • Making sure they follow the company’s hiring process and policies

Employers can run either a seven-year or ten-year civil court search, although a candidate only qualifies for a ten-year search if their salary exceeds $75,000 and it cannot be run in New Mexico, California, Montana or Massachusetts.

How Are Background Checks Regulated?

Employment background checks and hiring are regulated by certain agencies, including the FTC and EEOC. The FTC enforces the Fair Credit Reporting Act (FCRA), and the EEOC enforces federal laws against discrimination in the workforce.


If an employer obtains a background report without receiving written permission or sending the required notices along with rejection, job candidates can contact the FTC at

The FRCA gives the FTC grounds to sue employers that don’t follow the law. The FRCA also gives the people grounds to sue employers at the state or federal levels.


If candidates fear that an employment background screening has discriminatory nature, they can consult the EEOC at The EEOC enforces federal laws prohibiting employment discrimination because of race, color, sex, religion, origin, age, genetics, or disability.

The EEOC is responsible for investigating and mediating employment discrimination claims. The agency also files lawsuits in the public interest, making discrimination in the workplace punishable by law.


Now that you have a basic understanding of the different types of background check components and how the information can be used during the hiring process, you’ll have an easier time building an employment verification program for your own business and finding a screening company that offers the services you need.

It will be challenging to keep track of all the information that can be accessed via background checks. If you need help designing a background checks program, contact one of our experts at ScoutLogic.

We know how to implement background screening processes into your company’s standard procedures. We can get you started with pre-employment screening and employment history verification services that are right for your candidates.


ScoutLogic is not a law firm.  You should always check with qualified counsel before you make any changes to your background check company.  If you need a qualified attorney, we would be happy to make a referral for you.

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