Massachusetts Background Checks

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Massachusetts Background Checks

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 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?

  1. Credit Report: Aside from a lease agreement, a tenant credit 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
    • Winter weather damage

    The credit score and the resident score are key. 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 ave 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’s helpful).

  2. Criminal History: Wide-sweeping national databases, more narrow specific state databases, and granular county records are the main elements of most criminal history reports.
  3. Income Verification: There are several ways to verify income. Let’s look at some of the most common here: whether someone will pay on time and in full. Here are the main components of a credit report:
    • 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

  4. 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.
  5. 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:
    • 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. Tenant screening or employment background checks 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, background checks are 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

Massachusetts Background Checks

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

  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 recent data from Snappt, 85% of landlords and property managers report having experienced rental fraud in 2020. If a tenant lies on their rental application or submits fraudulent documents in Massachusetts, a credit check can uncover the truth before you allow the tenant to occupy your property. 

  1. Avoid future evictions 

Running a tenant’s eviction history in Massachusetts can also help you avoid evictions for nonpayment or criminal activity. Based on county data and statistical modeling from the Eviction Lab, Massachusetts had a 3.5% eviction filing rate pre-pandemic in 2018, with an estimated 37.5K 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 Massachusetts is a long and expensive process, taking anywhere from one to four months. Because tenants with a previous eviction are more likely to be evicted again, running an eviction history is essential component of a Massachusetts background check and can help you avoid high turnover. 

  1. Learn about the existence or nature of illegal activity 

It’s also important to run criminal background checks in Massachusetts. Massachusetts’ three-year recidivism rate is 33% (based on 2021 data), meaning that over a quarter of individuals released from prison in the state reenter the criminal justice system within three years. While landlords cannot have a blanket policy for denying convicts, certain crimes (like sex offenses) restrict convicts from certain housing options and are valid reasons to deny a tenant. 

What do Background Checks in Massachusetts Cost?

Background checks are relatively affordable across the U.S., but their costs 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. Massachusetts criminal records checks are provided by the Department of Criminal Justice Information Services. They can be requested through the CORI system (Criminal Offender Record Information service) of the Commonwealth of Massachusetts, which provides access to name-based court arraignment records in the state, typically for $25 per person. 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 Massachusetts Background Checks?

A state of Massachusetts 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 Massachusetts is restricted by several laws. A criminal background check Massachusetts considers complaint must adhere to the following Massachusetts housing and Massachusetts employment background check laws. 

MGL 93 § 52  

This Massachusetts law sets time limits after which certain information can no longer be reported on background checks. Note that there is no salary threshold like the FCRA provides, so these limits apply regardless of the employment: 

  • Bankruptcies – 14 years (the FCRA’s limit of 7 or 10 years overrules Massachusetts’s state limit) 
  • Civil lawsuits and judgments – 7 years 
  • Paid tax liens – 7 years 
  • Arrests, indictments, and convictions – 7 years (note that this is more restrictive than the FCRA, so it applies to all Massachusetts users of criminal information) 

MGL 93 § 62  

This law states that employers must follow a specific adverse action process if they use background check information for employment decisions in Massachusetts. Employers must notify the applicant if they were denied because of their background check report within ten days and provide both the CRA’s contact information and the applicant’s rights. 

Pay Equity Act  

This Massachusetts act prohibits employers from screening applicants based on their salary histories or including salary in employment background checks. 

Massachusetts “Ban-the-box” law (MGL 151-B § 4) 

Massachusetts is a “Ban-the-box” state. This law says that public and private employers cannot ask applicants about their criminal history information on applications. Criminal history information includes: 

  • Arrests, detentions, and dispositions that did not result in convictions 
  • First convictions for certain misdemeanors 
  • Misdemeanors over three years old 
  • Sealed or expunged criminal records 

CORI and Adverse Actions 

CORI (Criminal Offender Record Information) is a name/date-of-birth search that covers criminal court appearances in the state of Massachusetts. CORI’s policy says that employers who conduct 5+ criminal background checks per year must notify applicants of the potential for adverse actions being taken, send a copy of the report to the applicant, and give info about how to correct inaccurate info on a criminal record. 

If you are a landlord or property manager and decide to deny a tenant based on their background check, you also need to send an adverse action notice. Read this article to review legal reasons for denial and how to abide by the Fair Housing Act. Read more about adverse action notices for housing here. 

Know the Background Check MA Laws 

Before you run a background check in Massachusetts, be sure you’re aware of the state and federal laws that apply to their use. Keep in mind that while all Massachusetts 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 law in your region and adhere to the HUD’s recommendations. 

How far back do Background Checks in Massachusetts 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.  

 

Note that Massachusetts limits reporting of all arrests, indictments, and convictions (regardless of salary) to seven years. Local laws may have different restrictions, so be sure you’re aware of which laws apply in your region. 

How to Run Background Checks in Massachusetts?

When you need to conduct background checks in Massachusetts, 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 criminal history from the Massachusetts Department of Criminal Justice Information Services, contact an applicant’s former landlords and employers, obtain a credit report (Equifax, Experian, and TransUnion are the three major consumer 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 TransUnion SmartMove 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.