10 Background Check Terms You Should Know

Background check terminology can seem confusing, but understanding the key terms is essential to properly conducting and reviewing your organization’s background screenings. To help ensure you’re collecting information in compliance with federal, state, local, and industry laws and regulations, here are 10 background screening terms you should know.

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Background checks go by many names: employment screening, criminal record check, consumer report, or, in California, Investigative Consumer Report. At GoodHire, we define a background check as the compilation of all screens ordered at a particular time on a single individual or data subject. 

A background check may consist of a single screen or multiple screens. GoodHire offers the following screening types: identity verification; criminal and civil background checks; international background checks; driving record checks; employment, education, and professional license verification; healthcare sanctions checks; employment drug testing; and professional reference checks.

Understanding Background Check Terms

When it comes to background checks, there’s a lot of lingo to learn. While it may seem overwhelming, understanding the various terms used for background checks is critical to ensuring your company requests the right screenings for its needs, protects candidates’ privacy, and complies with all applicable laws and regulations. Here are 10 of the most important background screening terms you should know if you’re running background checks, or plan to implement a screening program.

1. Consumer Reporting Agency (CRA)

Organizations that collect or evaluate information about consumers and provide reports on these consumers to third parties, which may use them to establish an individual’s eligibility for credit, employment, insurance, and more. Employment screening agencies, like GoodHire, and credit bureaus, like Experian, are examples of CRAs. All CRAs must abide by the Fair Credit Reporting Act (FCRA).

2. Summary of Rights

The Summary of Rights document informs consumers of their rights under the FCRA, including: 

• The right to be informed that a background check will be performed
• The right to give written consent before the results of a background check are given to employers
• The right to know what’s in their file
• The right to dispute incomplete or inaccurate information
• The right to see their credit score (if that’s part of the report)
• The right to know whether information in the background screening has been used against them, such as in making an employment decision

Employers must give each candidate a copy of the Summary of Rights after a background check is completed.

3. Permissible Purpose

CRAs can share consumer reports only with end users who have a specific permissible purpose, such as screening for employment, extending credit, or issuing insurance. Employers receiving the reports must certify that:

1. They notified the candidate and received written permission before conducting a screening;
2. They will comply with the FCRA, and 
3. They won’t use the information to discriminate against the candidate, or otherwise misuse it in violation of federal or state equal opportunity laws. 

4. Credentialing

To confirm employers are eligible to receive background check reports and will use them for permissible purposes, FCRA-compliant background screening companies credential new customers. Credentialing is a one-time process that uses various sources to verify that your company is a legitimate business entity. It typically requires submitting an application and providing documentation. 

5. Onsite Inspection

To ensure that employment credit reports are only provided to legitimate businesses, a one-time onsite inspection of your primary place of business may be required as part of the credentialing process if you plan to order credit reports. 

6. Pass-Through Fees

In addition to the cost of a background check, pass-through fees may apply. These third-party access fees are passed through by the screening provider to the customer directly from the corresponding state and county offices and courts, motor vehicle departments, educational institutions, employment verifiers, or drug testing providers. GoodHire does not markup these additional data access fees.

7. Alert

A GoodHire background check will show an alert when one or more of the screens returns potentially adverse results. These alerts may include criminal records, an invalid or suspended driver’s license, a prior employer who can’t confirm a candidate’s employment, and more. 

8. Adjudication

In the background screening landscape, the term “adjudication” means two different things.

For HR professionals, adjudication is the process of evaluating the results of a job applicant’s background check against your company’s employment screening policy to help you identify candidates that meet your hiring eligibility criteria. Adjudication can be done manually; however, some background screening services offer automated adjudication. This lets you apply filters to automatically sort candidate results based on your company’s policies, state and local laws, and industry regulations.

In criminal records, deferred adjudication (also called diversion) means the court has deferred judgment on charges to provide the defendant with time to meet requirements such as drug or alcohol rehabilitation, community service, or probation. After the requirements are completed, the case will be reconsidered and may be dismissed.

9. Individualized Assessment

If a background check returns a criminal record, and federal, state, and local regulations don’t prohibit hiring that candidate due to the offense, the Equal Opportunity Employment Commission (EEOC) guidelines recommend performing an individualized assessment. This evaluation should consider the nature and gravity of the offense, the time that has passed since the offense or completion of the sentence, and the nature of the job sought and the offense’s relevance to the position. It should also enable the candidate to provide additional details about the offense, such as evidence of rehabilitation, circumstances around the offense, and other information that can help employers make an informed decision. 

10. Dispute

If a background check report includes information the candidate considers inaccurate, the candidate has the right to file a dispute. This process involves contacting the CRA, which can oftentimes be done online or via phone. The CRA must investigate the claim and share the outcome within 30-45 days, as required by the FCRA.

A background screening company’s dispute rate—the ratio of disputes found to be legitimate to the total number of background checks the CRA conducts—is a good measure of the accuracy of their results. 

GoodHire Simplifies the Background Screening Process

Understanding background check terminology can be confusing, but conducting background checks doesn’t have to be. GoodHire simplifies and streamlines the screening process. Our intuitive dashboard presents candidate reports in an easy-to-understand format so you can quickly identify key information, while our built-in compliance features help you mitigate risk and keep you informed every step of the way. 

We’re always here to help! Contact our FCRA-certified support team or check out GoodHire’s Employer Help Center and Candidate Help Center for answers to common questions and step-by-step instructions.

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