How to Check if a Contractor is Legit Before You Hire

Hiring a contractor is one of the biggest financial decisions a homeowner or business owner makes. A bad hire can mean shoddy work, cost overruns, or worse — an unlicensed operator who disappears with your deposit.

Here's how to check if a contractor is legitimate before you write that check.

1. Verify Their License

Every state has a licensing board for contractors. In Texas, it's the Texas Department of Licensing and Regulation (TDLR). In California, it's the Contractors State License Board (CSLB). A quick search on your state's website will tell you if the contractor holds an active, valid license.

What to look for:

• License status: Active vs. expired vs. revoked
• License type: Does it match the work they're proposing?
• Any disciplinary actions on file

2. Verify Insurance

A legitimate contractor carries two types of insurance: general liability insurance (covers property damage and injuries caused by their work) and worker's compensation insurance (covers their employees injured on the job). Without worker's comp, you could be liable if a worker gets hurt on your property.

Don't just take their word for it. Ask for a certificate of insurance and call the insurance company directly to confirm the policy is active and hasn't lapsed. Any contractor who pushes back on this request is a red flag.

3. Check Court Records

Has the contractor been sued? Federal and state court filings are public record and can reveal lawsuits related to breach of contract, negligence, or fraud. Federal court records are searchable online, and state and county court records — where most contractor disputes end up — are also publicly available.

A single lawsuit isn't necessarily a red flag — some businesses get sued frivolously. But multiple lawsuits, especially from customers, may warrant further investigation.

4. Look Up Consumer Complaints

The Consumer Financial Protection Bureau (CFPB) maintains a public complaint database. While it's primarily focused on financial products, many service businesses appear here. Additionally, check your state's Attorney General office for consumer complaints.

5. Read Google Reviews — Carefully

Google Reviews are useful but can be manipulated. Look for patterns:

• Are there clusters of 5-star reviews posted on the same day? (Likely fake.)
• Do negative reviews mention specific, consistent problems?
• Has the business responded to complaints professionally?

A 4.2 rating with 200 reviews is generally more trustworthy than a 5.0 rating with 8 reviews.

6. Search News and Forums

A quick news search can reveal lawsuits, regulatory actions, or investigative reporting. Reddit and local forums often have candid reviews from real customers who have no incentive to sugarcoat their experience.

7. Get a Background Check Report

All of the above takes time. A Vett.us report checks all of these data sources automatically — court records, CFPB complaints, Google Reviews, news, Reddit, state licenses, OSHA inspections, and more — and delivers an AI-graded PDF report in under 60 seconds.

It's $24.99 per report, which is a small price compared to the cost of hiring the wrong contractor.

Red Flags That a Contractor May Be a Scam

Even before you run a background check, watch for these warning signs:

• Door-to-door solicitation — Legitimate contractors rarely go door-to-door looking for work, especially right after a storm or natural disaster.
• Demands full payment upfront — A standard payment structure is 10-30% deposit, with the balance due upon completion. Never pay 100% before work begins.
• No written contract — A legitimate contractor will provide a detailed contract specifying the scope of work, materials, timeline, and payment schedule. A handshake deal is not a contract.
• Unusually low bids — If one bid is dramatically lower than the others, the contractor may be cutting corners, using substandard materials, or planning to hit you with change orders later.
• Pressure tactics — "This price is only good today" or "I have another customer who wants this slot" are classic high-pressure sales tactics. A legitimate contractor will give you time to decide.
• No physical address — A P.O. box or no address at all makes it hard to find the contractor if something goes wrong.

How to Pay a Contractor Safely

How you pay matters almost as much as who you hire:

• Use a check or credit card — never cash. You need a paper trail in case of a dispute. Credit cards offer chargeback protection if the contractor doesn't deliver.
• Never pay more than 30% upfront. Some states cap the legal deposit amount (California limits it to $1,000 or 10%, whichever is less).
• Tie payments to milestones — pay in stages as work is completed and inspected, not on a fixed schedule.
• Get lien waivers — after each payment, get a signed lien waiver from the contractor confirming they've been paid. This protects you if subcontractors or suppliers file a lien against your property.

The Bottom Line

Trust but verify. A legitimate contractor won't mind you doing your homework — in fact, they'll expect it. The few minutes (or dollars) you spend checking now can save you thousands later.