Credit checks affect more than whether or not someone can get a loan or a credit card. Employers run credit checks on prospective new workers; landlords use credit checks to research potential tenants. To run a credit check, you'll need someone's name, address and their Social Security number, which is also their taxpayer identification number on IRS forms.
The federal government introduced the Social Security number in 1936. Over the decades it saw use far beyond the Social Security Administration and the IRS began using it in 1961. As a result, using it in business makes it easier for companies to provide information to the IRS, and Social Security numbers are required in banking, investments and other situations. That makes it a useful tool for anyone doing a background check.
To run a credit check, contact one or all of the three main credit bureaus -- Experian, Equifax and TransUnion -- and order a report and a credit score. The three bureaus may not have the same information, so it might be worth your while to check all three.
A credit report provides landlords and lenders with information about an individual's financial history -- whether she pays her bills on time, if she's filed for bankruptcy, and whether she's carrying a lot of debt. Employers use credit reports to verify employment history, but some businesses believe employers with credit problems or a high debt load are less trustworthy and more inclined to steal.
Under the Fair Credit Reporting Act, you must have a valid reason for requesting a credit report on someone: You're considering renting to him or extending him a loan, or you're doing a pre-employment background check. Employers have to have written consent to make a credit check, which is usually part of the job application paperwork; employers, landlords or lenders who reject an applicant based on negative information in the credit report have to notify him of the decision and their reason.
Some states have stricter laws than the federal government. Under federal law, for example, an employer who conducts his own background check -- rather than hiring someone to do it -- doesn't have to seek permission or explain his decision; in California, employers have to ask for consent and explain negative decisions, regardless of who did the search.