Whether you are applying for a security clearance or seeking renewal, debt and poor credit can have a significant effect on your ability to obtain or maintain a security clearance. In fact, financial considerations are the top reason for denying a security clearance. According to the National Security Adjudicating Guidelines:
“Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information.”
How Do I Ensure My Financial Situation Won't Impact my Security Clearance?
Once you're in debt, it may seem there is no way out of it. But there are steps you can take to improve your financial situation and increase the likelihood of obtaining or maintaining a security clearance.
Be Aware of Your Financial Situation
It is paramount that you maintain awareness and control of your financial situation. The background investigators will perform a credit check; thus, a natural starting point to assessing your financial standing is to request a copy of your credit report. You have the right to request a credit report once a year from the three major consumer reporting companies—Equifax, Experian, and TransUnion.
Correct Any Inaccuracies
This is another reason it is important to keep aware of your financial history.
After reviewing your credit report, you must first assess if there is any inaccurate information. If you identify any incorrect information (i.e. unknown bank accounts or debts) or information you believe to be related to fraud or identity theft, you should submit a credit dispute immediately. If you successfully dispute the debt, maintain all documentation concerning your credit dispute.
However, when adjudicating security clearances, the Defense Office of Hearings and Appeals (DOHA) has repeatedly maintained that providing proof that a debt has been removed from your credit report is not sufficient evidence alone to illustrate the debt has been resolved. Thus, it is important to also contact the institution reporting the inaccurate debt and maintain documentation that the debt has been improperly attributed to you.
Make a Financial Plan to Pay Off Debt
After confirming that your credit report accurately reflects all debts attributed to you, you must develop a financial plan to pay off your debt. If you have a large amount of debt or debts to several different institutions, it is recommended you contact a reputable financial planner or credit counseling service. Oftentimes, these agencies can negotiate lower interest rates and favorable payment terms to assist you in resolving your debt. They will also work alongside you to develop a realistic budget and a payment plan. Taking these actions will be looked upon favorably by the clearance adjudicators as it demonstrates that the problem is now under control and is being actively resolved.
You should prioritize debts that are in collection or have been “charged off.” Charging off a debt means the person to whom you owe the debt is no longer seeking to recover the money and they have written it off as a loss. Nevertheless, you are still financially obligated to pay these debts, and should seek to remedy them as soon as possible. You should also strive to meet the minimum payment for all outstanding debts and avoid any late payments. Once again, maintain all proof of payment of your debts to provide to the clearance investigators.
If you have failed to file your taxes for previous years, you should contact a tax advisor as soon as possible. Failure to file your taxes is a strong indication of your unwillingness to follow established law since filing state and local taxes is a requirement imposed upon all US citizens. Ultimately, it will reflect poorly on your application and without prompt mitigation efforts, will likely lead to a clearance denial.
At Patriots Law Group, we're here to help. We have represented many clients, both military and civilian, through all stages of security clearance adjudications. Our thorough knowledge and experience in this practice area lends itself to providing you valuable advice throughout an undoubtedly stressful process. Let us help you to reach the best resolution possible. Give us a call today at 301-952-9000.
DISCLAIMER: The information above is for general informational purposes only. No attorney-client relationship is intended or created by this information. Each individual situation is different and therefore a formal in-person consultation is necessary before any specific advice may be relied upon as appropriate and accurate for a given situation. Please call Patriots Law Group at 301-952-9000 to set up a consultation if you wish to obtain specific legal advice you may rely upon. We serve clients anywhere in the world, with in-person consultations available at our Suitland, MD office — right next to Andrews Air Force Base — for clients in Maryland and Virginia.