Simple, Effective Screening for Better Tenants in New York

Background checks are a vital part of thorough tenant screening. Every landlord needs to know the history of every applicant. Background checks give you a good idea of whether someone makes payment on time, stays out of massive debt, has a criminal past, and a lot more.

Background checks also reduce the chances of tenant turnover, protect you from liability, and help you and other tenants remain safe.

In this article, we’ll help you understand what background checks consist of, how to ensure you get the information you need, and what you need to know about your state’s rules regarding them.

What are Background Checks? 

Background checks typically consist of a credit report, criminal history, income verification, eviction history, and a rental application. 

Credit Report

Aside from a lease agreement, a tenant credit report might be the most crucial document for a landlord to understand. This document is one of the best ways to determine whether someone will pay on time and in full. Here are the main components of a credit report: 

• • Basic information like former names/aliases, current and previous addresses, etc. 
  • Fraud indicators like invalid phone numbers or phony social security numbers 
  • Tradeline summaries that give a snapshot of an applicant’s active accounts  
  • Inquiries that show a list of companies who viewed an applicant’s credit file over the last two years 
  • Credit/resident score 

A credit score is a numerical value anywhere from 300-850 that helps illuminate an applicant’s creditworthiness. If an applicant has a score of 500 or less, proceed with caution. Most reliable tenants will have a score above 560. 

A resident score is similar to a credit score, but more directly reflects someone’s reliability as a tenant. Both scores are proprietary, so the exact formulas aren’t available to the public. That said, resident scores typically include a recommendation on whether to accept an applicant or not (this shouldn’t be treated as gospel obviously, but it can be helpful).  

Criminal History

Wide-sweeping national databases, more narrow specific state databases, and granular county records are the main elements of most criminal history reports. 

Income Verification

There are several ways to verify income. Let’s look at some of the most common here:  

• • Pay Stubs: Paychecks are the most common way to verify income. Anyone with full-time or part-time employment can make copies of paychecks and send them to you. 
  • Yearly Tax Returns: A federal tax return is another option to obtain proof of income. This is often an excellent option because it’s an official legal document, so it’s difficult to fake. 
  • W-2 Tax Form: These forms show employer’s withholding payroll taxes from workers’ earnings. This is another good option because it’s a document directly from an employer. 
  • Bank Statements: This method is especially effective for self-employed applicants because they won’t have regular pay stubs like those who work for traditional businesses. 

Important Note: Innago’s new income verification feature, which you can learn more about here, makes it easier than ever to ensure your tenants have the necessary funds to pay you. 

Eviction History

Except in cases where overdue rent went to collections or a previous landlord reports late payments, credit reports don’t usually show evictions.  

Federal law typically prevents evictions from being shown on a background check after seven years, but this figure varies by state. 

If you cannot see an applicant’s eviction history on a credit report or obtain the information by contacting their previous landlords, then you may pull an eviction report. However, certain states have restrictions on different kinds of reports (we’ll address those if they’re relevant later in this piece).  

Eviction history matters because the cost of an eviction for landlords is often between $4,000 and $7,000 or more. That means that if a tenant was evicted, they likely left their previous landlord with no other choice. 

Application

A rental application is a preliminary form used to obtain basic information about an applicant and their eligibility. Most applications ask for this information:  

• • Basic Contact Information: Think entire legal name, cell phone number, email address, etc. 
  • Current and Former Renting Experience: Four to five years back is typically plenty. 
  • Landlord References: Contact previous landlords and get their take on applicants. This is a critical step that some landlords skip over. Make sure you’re not one of those landlords. 
  • Employment History: You want to know current and former employers and get consent to contact them. 
  • Written Permission to Run a Credit Check 
  • Legal Disclosures: Here’s a helpful article on what disclosures to include. 
  • Additional Inquiries: Be careful here. Make sure you don’t ask questions that violate laws. Only ask about things like pets or smoking. And make sure you’re consistent. 

Why Do You Need to Run Background Checks? 

Background checks in general are utilized by a variety of groups: landlords, employers, lenders, licensing agencies, government agencies, etc. They are run to ensure that a candidate for a job, license, property, or loan is properly qualified and does not have a history of behavior that would interfere with their ability to perform the duties required under contract. Background checks minimize legal liability, protect companies’ assets and current employees, and are sometimes required by clients.  

When it comes to landlords, a New Jersey background check is needed to: 

• Protect the safety and property of other tenants 

• Reduce tenant turnover 

• Minimize legal liability 

• Increase the likelihood of on-time rental payments 

• Avoid conflict and crime in the rental community 

• Narrow down applicants for a high-demand property 

• Prevent expensive and lengthy eviction processes 

New York Background Checks 

Landlords in the “Empire State” should run background checks on potential tenants as a precaution and general policy. Here are three reasons to run background checks in New York: 

1. Identify rental application fraud 

Rental application fraud, which occurs when a tenant lies on their application or submits falsified pay stubs, bank statements, etc., is on the rise across the country. According to a recent survey from Snappt, the New York/New Jersey area has a 6.1% rental application fraud rate, in the top 20 among major metropolitan areas in the U.S. If a tenant lies on their rental application or submits fraudulent documents in New York, a credit check can uncover the truth before you allow the tenant to occupy your property. 

2. Avoid future evictions 

Running a tenant’s eviction history in New York can also help you avoid evictions for nonpayment or criminal activity. Based on county data and statistical modeling from the Eviction Lab, New York had a 9% eviction filing rate pre-pandemic in 2018, with an estimated 332K eviction filings in that year. Eviction rates across the country continue to rise, making it extremely important to avoid that risk if you can. 

Eviction in New York is a long and expensive process, taking anywhere from one to five months. Because tenants with a previous eviction are more likely to be evicted again, running an eviction history is an essential component of a New York background check and can help you avoid high turnover. 

3. Learn about the existence or nature of illegal activity 

It’s also important to run criminal history checks in New York. According to data from Wisevoter.com, the current three-year recidivism rate in New York state is 43%, which is high compared to other states. While landlords cannot have a blanket policy for denying tenants based on an individual’s criminal history, certain crimes that appear on criminal records and New York public records (like sex offenses) restrict convicts from certain housing options and are valid reasons to deny a tenant. 

What Does a New York Criminal Background Check Cost? 

Background checks are relatively affordable across the U.S., but your final New York background check cost will vary depending on the area searched and the level of information requested. Searching national records typically costs between $13-60 per person, while searching an individual state’s records costs between $10 and $25 per person. Searches of public criminal record information can be obtained through the New York State Office of Court Administration (OCA) for a fee of $95.00 per name requested. County records, which tend to be more accurate and up to date, cost $16-$25 per person per county checked. You can learn more about each of these specific types of background checks in our article on the topic. 

Which Laws Apply to New York Background Checks? 

A state of New York background check cannot be used by anyone for any purpose. Due to fair housing and employment protections, the use of credit reports and criminal background checks in New York is restricted by several laws. A criminal background check New York considers complaint must adhere to state laws. 

New York State Background Check and Ban-the-Box Laws 

The following state laws in New York apply to pre employment background checks. 

NY Human Rights Law § 296.16 

This law prohibits public and private New York employers from asking about or discriminating based on non-pending arrests that: 

• were dismissed under Criminal Procedure Law § 160.50 

• resulted in a youthful offender adjudication (CPL § 720.35) 

• resulted in a conviction that was sealed under CPL § 160.50, 160.55, or 160.58 

• was followed by a termination of the criminal action or proceeding in favor of the individual 

Note that if an employer asks a job applicant to provide information about any of the above, the applicant can legally respond as if the arrest, criminal accusation, or disposition of the arrest/criminal accusation did not occur. 

New York Fair Credit Reporting Act (NY Gen. Bus. Laws § 380-J) 

This law prohibits credit reporting agencies (CRAs) from reporting or maintaining information in a consumer’s file about the following: 

• Arrests or criminal charges unless there has been a conviction, or the charges are still pending 

• The consumer’s race, religion, color, ancestry, or ethnic origin 

• Information known to be inaccurate 

• Bankruptcies more than 14 years old (note that federal law limits bankruptcies to ten years) 

• Other adverse information more than 7 years old. 

Note that there is a salary exception to this law for jobs that pay more than $25,000. 

NY Corr. Law § 752 

This New York corrections law prohibits unfair discrimination against people with criminal convictions (including denied employment or other adverse actions) based on their criminal records, except when: 

1) there is a direct relationship between one or more of the previous criminal offenses and the job, or 

2) hiring the person would involve an unreasonable risk to property, safety, or welfare of individuals or the public. 

NY Corr. Law § 753, Article 23-A 

This law requires employers to conduct “individualized assessments” when considering a job applicant’s criminal records as part of a New York employment background check. The following factors must be considered in an individualized assessment: 

• The state’s public policy to encourage employment of people previously convicted of criminal offenses 

• The specific job duties and responsibilities 

• The bearing that the criminal offenses will have on the applicant’s ability to perform the job duties and responsibilities  

• The time elapsed since the criminal offense 

• The age of the person when they committed crime 

• The seriousness of the offense 

• Evidence of the person’s rehabilitation and good conduct 

• The employer’s legitimate interest in protecting property, safety, and welfare of individuals or the public 

NY Corr. Law § 754 

If an employer denies an applicant previously convicted of a criminal offense, this law requires them to provide a written statement explaining the reasons they were denied within 30 days of the applicant’s request. 

NY Labor Law 194-A 

This law prohibits employers from asking about job applicants’ prior salary history and using that information to determine the salary of the new position. 

New York City Municipal Laws 

In addition to state laws, employers and landlords in New York are also subject to any local or municipal laws that may apply in their region. Below are a few of these major municipal laws in New York City, but other cities like Buffalo and Rochester also have their own ban-the-box ordinances. Be sure to research your specific city’s legislation.  

New York City Fair Chance for Housing Act 

Passed by the NYC Council late last year, this law set limits on how far back landlords can use criminal background check information during tenant screening. Under this law, landlords cannot consider misdemeanors more than three years prior and felonies more than five years prior. 

New York City Fair Chance Act (NYC Admin. Code § 8-107-10,11) 

This New York City “ban-the-box” law prohibits New York City employers with four or more employees from conducting criminal background checks until they have extended a conditional offer of employment. NYC employers should run only non-criminal background checks until they’ve made a conditional offer, after which they can then check criminal conviction records. 

Note that non-convictions, no matter what the type, are completely protected under this law—all employers in NYC are prohibited from asking about, seeking information about, or basing adverse action on non-conviction criminal information (there are a few exceptions for law enforcement agencies hiring for certain positions). 

New York City Stop Credit Discrimination in Employment Act 

This law prevents most employers in New York City from asking about job applicants’ credit history during employment decisions. The law states that it is unlawfully discriminatory for employers to “request or use the consumer credit history of an applicant or employee for the purpose of making any employment decisions, including hiring, compensation, and other terms and conditions of employment.” 

Certain positions are exempt from this law, such as police offers, law enforcement positions, and other positions for which the employer is required by state or federal law to use consumer credit histories. 

Adverse Actions 

If you decide to deny an applicant, it’s critical to know rules and regulations regarding adverse actions. Read this article to review legal reasons for denial of tenants and how to abide by the Fair Housing Act. If you deny a tenant based on information in consumer reports including New York criminal background checks, you’ll need to send them an “adverse action” notice. Read more about these notices here. 

Know New York Background Check Laws 

Before you run a background check in New York, be sure you’re aware of the state and federal laws that apply to their use. Keep in mind that while all New York counties are subject to state-wide laws and executive orders, some counties may enforce additional regulations. Additionally, you must get written consent from a tenant before running a background check. Be sure you’re educated on the federal and state laws in your region and adhere to the HUD’s recommendations if you use background checks during tenant screening. 

How Far Back Does a State of New York Background Check Go? 

When you use consumer reports to make tenant decisions, you must comply with the Fair Credit Reporting Act (FCRA). 

Section § 605 – 15 U.S.C. § 1681c of The Fair Credit Reporting Act (FCRA) applies in all 50 states and mandates a seven-year restriction on reporting certain background check information like civil suits, civil judgments, and arrest records (except in certain cases where an employer is hiring for a job with a salary more than $75,000). The FCRA doesn’t have similar timeline restrictions on criminal convictions, but some states restrict reporting conviction information at the state or local level.  

New York state upholds the FCRA’s seven-year restriction on non-conviction criminal information. CRAs in New York cannot report non-conviction information more than seven years back except in instances where the case is still pending. However, note that there are stricter local laws in New York City for landlords’ use of criminal information – landlords in NYC can only consider misdemeanors up to three years back and felonies up to five years back, as described above. 

How to Run Background Checks in New York 

When you need to conduct background checks in New York, most people either conduct a DIY background check or use a third-party provider. If you run a DIY background check, your best bet is probably to request a New York state criminal history from the New York State Office of Court Administration, contact an applicant’s former landlords and employers, obtain a credit report (Equifax, Experian, and TransUnion are the three major credit reporting agencies that compile credit information), verify income, look at the sex offender registry, and ensure you have all the information you need to conduct thorough tenant screening. DIY checks can be risky, though, because it’s easier to run afoul or relevant laws inadvertently (unless you’re very well-versed in the law).  

The better option for running a background check is to partner with a third-party provider, who often bundle credit, resident, criminal, and eviction histories together as a package. You can select the kind of reporting you need and let the third-party take care of the collection process. 

Background Checks with Innago 

At Innago, we’ve partnered with Experian to help you review background check information and identify high quality applicants. Running a background check through Innago allows you to quickly and easily identify the best applicants and ensure their application information is accurate. Likewise, Innago’s income verification feature helps our users verify reported income by connecting to their bank account, payroll provider, or by uploading documents. 

Disclaimer: This article is for educational purposes only and does not constitute legal advice. We recommend you consult with professional counsel if you have legal questions regarding your specific practices and compliance with relevant laws.