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Do Investors Run Background Checks?

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Job options may be limited for felons recently out of prison, but a felon can find a job. Felons who are running or planning to start a business may need financial assistance and might consider an investor.

This blog post will cover whether or not investors run background checks.

  • What Is in a Background Check?
  • Working With an Investor
  • Investor Background Check?
  • Can You Run a Background Check on Yourself?
  • Recommended Action


What Is in a Background Check?

There are many things involved in a typical background check. Anyone can get ahead of the game by running a background check on themselves. Employers are looking to hire those who will be successful and stay with a job.

Obviously, it is in an employer’s best interest to review an applicant’s background before filling a position. Among the factors considered by an employer are:

  • Work productivity
  • Positive attitude
  • Getting along with coworkers and customers
  • Having the necessary skills
  • Being on time
  • Honesty

Concerns about honesty are the most significant for any felon trying to live an honest life. Their criminal history can be a problem when applying for a job even if they are now committed to living an honest lifestyle.

There are a number of areas someone will look at as part of a background check looking at character and past mistakes, including:

  • Credit reports
  • Driving records
  • Educational records
  • Criminal offenses

Certain information is not available to anyone conducting a background check, including:

  • Bankruptcies after 10 years
  • Civil suits, civil judgments, and record arrests after seven years
  • Paid tax liens after seven years
  • Accounts placed for collection after seven years
  • Any other negative information except criminal convictions after seven years

The criminal record review portion of a background check includes looking for any criminal offenses, which will show all convictions and non-convictions, including cases not prosecuted or those dismissed. Convictions have no time limit while a non-conviction will be observed for seven years. If a felon has his or her record expunged, then their record will be clean.

Working With an Investor

An investor is a person who commits capital with the expectation of receiving a financial profit. Investors make investments in order to increase their money and/or provide income. Investors typically determine favorable investment opportunities to minimize risk while maximizing returns.

Small business owners sometimes need to rely on investors for financing. Whether the company is introducing a new product, expanding, or performing a major upgrade on equipment, investor resources can provide help.

Investors Run Background Checks?

Investing in any company has major risks an investor needs to know before making a major financial decision. The reason for doing a background as an investor is to look for any potential difficulties that could cause problems for an organization.

Investors may not call their review a background check but consider it to be due diligence. The depth of the due diligence will depend on the size of the potential financial commitment. The main concern for an investor is whether his or her money is being handled appropriately.

An investor will look at factors like:

  • Experience
  • Credibility
  • Financial status
  • Criminal records
  • Civil lawsuits
  • Tax liens
  • Indications of financial stress

Defaulting on loans and other finances is an important part of an investor background check. An investor will typically request a credit report looking at financial payment history and existing accounts. Some investors may check with former associates to better understand a person’s character.

Many investors will require a background check for a review of criminal and civil court records. Criminal and civil judgments can present a major red flag for any investor. The background check will also look at even minor criminal offenses in the past. These types of actions can indicate impulsive behavior and poor decision-making. Different investors will have a different review of what may have been a problem in the past.

An investor can search for information through the financial industry regulatory authority (FINRA) looking for information regarding broker dealers and individuals registered to sell securities. There may also be information from the Securities and Exchange Commission (SEC).

Strict due diligence can uncover evidence of criminal behavior whether there was any conviction through the courts or not. There may be evidence of fraudulent activity that was not brought to the attention of the legal authorities. An investor needs to have information regarding such difficulties.

Can You Run a Background Check on Yourself?

A felon can arm himself with the information needed to be successful by conducting a background check on themselves. A felon would have the best chance by having his or her record expunged.

There may be times when it is important to consult an attorney. It is essential to take action and not risk a chance on the results.

The different kinds of personal background checks that a felon can run include:

  • From the court records
  • A credit report
  • Driving records
  • An educational report

Recommended Action

It is essential for a felon to be open and honest regarding anything concerning a conviction when dealing with a potential investor. Lying about a conviction will only jeopardize a felon’s chances at obtaining financial assistance from an investor. It is important to remember not just the mistakes we make but how we recover from them for the future. Establishing an honest life is not easy to do but is certainly important in moving forward.

He or she must be willing to see him or herself in a different light, and ready to establish an honest life. The best opportunity for success in a new life begins with having support from family and friends. 

So what do you think about this blog post, about whether or not investors run a background check? Have you or someone you know had an investor run a background check? What was that like and what happened? Please tell us in the comments below.

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