As recently as 2007, 50% of all security clearance denials occured as a result of "financial considerations." In other words, "Your credit history makes you a security risk." That number applies to all branches of the military, by the way.
Do You Have to Have Good Credit to Get and Keep Security Clearance?
Good credit isn't a necessity to get and keep a job that requires you to have security clearance. What's crucial is that you do not demonstrate a state of financial need. The military wants to see that you are financially stable and not struggling with debt. If the military determines that your debt load is too high, they may just turn down your application for security clearance.
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| The DoD can't risk careless workers spilling secrets. |
Collections Accounts Add to Your Allowed Debt Amount
There is no set figure you have to stay below in order to get and keep your security clearance. Experts estimate, however, that $3500 is the general figure to shoot for.
But what's more important that the amount of debt you carry is how you got there. For example, a reviewer will scrutinize a $500 collection account more closely than a $5000 student loan debt that you pay on time each month. Why? The collection account denotes carelessness and irresponsibility whereas the student loan account does not. Carelessness and irresponsibility are more important than the amount of debt you carry, because these factors make you a bigger security risk to your country. Thus, collections on your credit report are particularly dangerous if you're headed for a security clearance review.
Pay Off Collections Before Your Security Clearance Review
As much as I hate to tell anyone to pay off a collection agency, the simple fact of the matter is that, in a security clearance review, paid collections reflect far better on you than unpaid ones. Sure, it won't help your credit score and paying them doesn't result in them being removed from your credit report, but it reduces the debt load you carry and makes you less of a security risk. Keep in mind, however, that the very fact you had debts that fell into collections will count against you during your security clearance review. You may be asked to provide a written statement explaining the reasons behind the collections on your credit report.
If you plan to pay off collections before your security review, do so at least 60 days ahead of time. This gives the collection agencies time to update your credit reports accordingly, and for you to demand that they update your report if they don't do so within 30 days. You can choose to pay at the last minute, but if you do, make sure to get a statement from the collection agency noting that fact and noting that you have a zero balance. You can show this statement to your reviewer in lieu of an updated credit report.
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Security Clearance and Bankruptcy
Lee: While your advise is valid, I would like to point out some inaccuracies. According to published research studies of convicted US spies, Money (either need or greed) was a motivating factor in 69% of the cases, and it was apparently the sole motive in 56%. Of those who received payment the majority received less than $15K. 11% received less than $1000. There is not a set debt figure. It is about spending outside of what you can afford. Patterns of overspending are important. If your credit cards are maxed out that is bad. If you owe $5000 on a credit card but $60,000 in available credit that should not be an issue. The number one thing to remember is to be honest on your SF-86 (EQIP) and in your interview. Don't lie, misled, or "accidentally" omit information. You should provided a written statement clearly explaining negative information noted on your SF-86. Keep a copy of the statement for reference at your interview. Making irresponsible credit decisions is an indicator of poor decision making and impulse control. If you are in the military/work for DoD you on base financial health resources and keep a record of the classes/meetings (to help show you are trying to change).
ReplyDeleteIf I paid off a collection years ago - so long ago that its no longer on my 24 month credit report that I can access online, but still within the 7 year period, are there procedures I can take to list these collections on a SF 86?
ReplyDeleteKeep in mind that when I noted the amount potential traitors would be offered, I made it clear that I was guessing. I don't know. I've never been in the military. What I do know is that to some individuals, 10-15k or even 5k is an inordinately large sum of money. I specifically avoided setting a figure for just that reason – it would likely be inaccurate.
ReplyDeleteYou're right about their being no set debt figure that determines whether or not security clearance will be denied, but there is a set figure for red-flagging an application. The amount was set at $3500 in 2006 and went into effect in 2007. To the best of my knowledge,that figure remains at $3500.
Thank you for the additional information regarding how to handle a security clearance investigation for my readers. I can only hope that the people who need that information most take the time to read the comments section.
Anonymous #2,
ReplyDeleteYour real credit report contains more than 24 months of history, and you can access it online for free at AnnualCreditReport.com. Do so. If you have old debts that aren't on your credit report anymore, I'd advise you to just keep your mouth shut about them.
But...and this is a big "but," not mentioning debts you owe during a security clearance investigation may constitute providing false information by omission. If the individual who posted the comment above yours comes back, he may be better equipped to answer your question than I am.
You can always ask your superior office what to do in a situation like that one. But go get your real credit report first!
As stated in the post, the government does not have a set debt/income ratio or credit score that a security clearance applicant must meet to obtain or retain a clearance. The government uses a "whole person" concept in order to analyze all aspects (positive and negative)of an applicant's behavior. Therefore, the government will analyze negative credit report information (such as collection accounts or bankruptcy filings) by looking at the circumstances behind a person's failure to pay debts in a timely manner. If the government does deny or revoke your clearance, you should immediately contact a security clearance attorney to assist with your appeal.
ReplyDeleteHI Lee,
ReplyDeleteI am applying for a summer internship with USAID, and the completion of my application will be followed by a security clearance. A few months ago, I thought I'd obtain a copy of my credit report. Beyond my surprise, I a had a medical debt in collections that went into delinquency in 2010. I am 23 years old, and during the time that I was an undergrad, I visited the hospital. My family said that they would pay for my medical bill, since I was away from college, and did not have health insurance at the time (I was 21 years old then). Unfortunately, beyond my suprise, they never paid the bill, and as a result, it went into collections. A few months ago, as soon as I obtained a copy of my credit report and discovered the collection, without hestitation, I paid the debt the next day. In applying for this internship, they will be doing a security clearance involving my credit report. I continue to have excellent payment history from all three credit bureaus, and even though the collection will be on my report for the next 7 years, will that 1 paid collection hinder my security clearance, because I like I said, I have always been financially responsible with an excellent payment history.
That depends on a variety of factors. The chief factor would be whether or not you paid the debt. You have, and that works in your favor. The other information on your credit report is also significant. Provided your credit history demonstrates that you can responsibly manage debt (current and paid on time credit card and loan accounts, etc.) I don't see this being a big hurdle for your security clearance. Should the subject come up, tell the truth. Explain that you were an undergrad and you really didn't know that the bill wasn't paid or that your credit was in danger.
ReplyDeleteKeep in mind that paying a debt is not a legal admission of guilt, and you can still dispute the debt on your credit report.
Lee,
ReplyDeleteI went through a period of time (since 2006)in which I did not pay on my credit cards. Needless to say, they all went to collections. I averaged about $2300.00 in delinquent debt. I'm about to undergo a security clearance for a federal position and submitted my form online today. As of last week, I paid each of my debts in full with my current salary from my federal internship at a different location than I'm applying for a full time position. I understand that these debts have been in collections for some time. I was struggling to buy books for school, make rent, and eat on student loans. I also have 95,000.00 in student loans, which are in deferment. I am currently in a PhD program. My question is...will the fact that I just paid my collections off prevent me from getting a clearance? Be very honest :)
Paying your collections off doesn't hurt you. With a clearance check like that, its better to have less debt.
DeleteDoes that $3500 include student loans in deferment? I have 95,000.00 in student loan debt. I'm pursuing a Ph.D.
ReplyDeleteDefaulted federal student loan debt looks a lot nastier in a security clearance check than private loan debt. I guess it depends which one you're carrying. If a student loan is just deferred and not defaulted, I can't see how that would hurt you. Debt itself isn't a bad thing (unless, of course, there's loads and loads of it) its late debt that throws up the biggest red flag.
DeleteI was just send a Declaration for Federal employment document for a job I interviewed for last week. The position I am pursuing required a TS security clearance. I have 2 credit card accounts that were written off then sold to collection agencies over 5 years ago. I have an account that is in collection from a credit card processing company that I was the guaranteer that happened in 2009. I have been working with a credit counseling company but they suggested for me to not pay or set up arrangements since they debts are so old an about to fall of my credit in 2014 and 2015. I really want the job in question. Do you think these issues will cause me to be denied the security clearance if I disclose the information? All of my other accounts have been current for over 3 years and I am about to pay off all my existing debt excluding the collection accounts in the next 60 days. Suggestions?
ReplyDeleteI honestly don't know. If the debts were for piddly amounts like say, a few hundred dollars, I highly doubt it would screw up your security check. You didn't mention your state of residence, but if the SOL has already passed in your state (and it most likely has) then that also works in your favor.
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Lee,
ReplyDeleteI'm unsure if you're still responding to this post, but I thought I would ask since you seem to have some good advice. I'm currently preparing for an SF-86. I pulled my credit report and found I had an old. small bill from years back that I had no idea about - and I promptly paid it and have a letter saying so. In addition, my student loan was in forbearance for what I thought was 12 months, but it turns out it was 9 months, and I missed 2 payments. I have also promptly taken care of that and am back on payment schedule. Will these hurt me really badly? I have an excellent payment history on on my loan otherwise, and everything else - a car, a couple of credit cards, and a few other bills that I pay on time as agreed. Last question. Although not on my credit report, I have medical bills that I have neglected paying for the last year. My reason was an unforseen family expense that wiped out my savings as I was beginning to pay the bills, and caused a financial ripple for months. But has since been corrected, and I am now in credit counseling for the medical bills to get them in order. I'm sure you can guess my question. I will absolutely note this on my SF-86, despite it not being on my report, because I want to be honest. To what extent will this hurt me? I appreciate your candor.
The criteria you must meet to pass a security clearance check varies much more than the criteria you must meet to get a credit card or loan. I can't tell you that you'll absolutely be fine or that you have no hope. It's highly unlikely, however, that your paid debts will hurt you that much – especially since you've kept up with your other financial obligations.
ReplyDeleteBeing honest is always a good idea, especially if the agency you're applying with decides to do a clearance interview and grill you on your past financial history. Stay calm, be honest and think positive. After the recent recession more individuals than ever before have credit scores that are in the toilet. Your history really doesn't seem too bad and, with luck, won't affect whether or not you get the job.
If you don't mind, respond to this post and let us know how it went for you. Any information that can help other readers in the same situation is always welcomed. Best of luck.
This comment has been removed by a blog administrator.
ReplyDeleteI have a debt of approx. $3300.00,my job depends on getting this clearance! I will have approx. $16000.00 that is being payed monthly .... cars,credit cards,medical! will keep me from getting my clearance?
ReplyDeleteI don't know. That depends on a myriad of factors. The best thing to do would be to ask your superiors about the credit criteria required to qualify for the clearance.
DeleteI entered false info on my sf86 accidently saying i had no debt...Pulled my credit report and saw i had a 5000$ student loan in collections.... I also have medical bills that are not on my credit report though....Will the collections affect my clearance if I set up payments a month before I SHIP OUT TO ARMY ...im very nervous about this however have noooo other backround
ReplyDeleteHi Lee,
ReplyDeleteQuick question, I have an outstanding medical debt, around $550, relating to some tests I had received last year. Due to disagreements I have had with the hospital, the bill has now been sent to collections. I am currently applying to different federal jobs and I currently work at a federal agency as a contractor where I had to pass a security check to get in. The check ran between the time I got the procedure and the time the bill went to collections. Beyond that, I have no debt of any kind (student loans or credit card). My credit score is also very good. I was wondering if you could give a feeling of how this new collections issue would affect any background check.
It will unquestioningly hurt your credit scores, but employers and lenders alike often don't place the same level of importance on unpaid medical debt that they do on other varieties of debt. This is because medical debt doesn't indicate that you're unreliable--it merely indicates that you had a medical emergency. Although paying off collections doesn't increase your credit score, paid collections look a whole lot better in a background check than unpaid ones. Just my two cents.
DeleteMy exhusband has THE top secret clearance for a defense co. He asked me to please not garnish his wages (because of the clearance) for alimony and promised to always pay. My attorney told me he'd be fine & do the garnishment .... I listened to my ex instead, now flash forward 2 years.... He has a new wife with children and my check is the bottom priority. I still have the ability to garnish, and I will.... My question is do you think this will affect his clearance at his next review. If he should loose his job over this then of course there will be no money.. Thank you so much.
ReplyDeleteI don't know for certain (our government has been known to do some zany things) but I'd say its unlikely. The main reason garnishment can pose a problem for those with security clearance is because it A.) demonstrates that the individual is unreliable paying his debts--indicating he may be unreliable in general and B.) Anyone who owes a debt poses a greater risk of theft. In this case, that would be theft of government secrets that could be sold to other countries.
DeleteChild support, however, is a different sort of beast. Having a child doesn't indicate you're unreliable, and unless you owe heaps of back child support the debt issue isn't there either. Child support is just another monthly bill. Certain states require that child support be garnished and doesn't acknowledge private payments. For all of these reasons, its highly highly unlikely that your ex's child support will have any impact whatsoever on his security clearance.
If in some bizarre turn of events he loses his job that's not YOUR problem. He can either get another job and start paying child support again or go to jail, and something tells me that going to jail is a heck of a lot worse for security clearance than a child support garnishment.
Thank you. Our children were over 18 when we divorced so it is strictly alimony. The court order says $1,700/month until retirement or remarriage. I get 1/2 the pension at retirement. He has always told me if I garnished he would loose his clearance...and especially now that we have been divorced a few years, they will wonder why I felt I needed to do that. He didn't pay directly for the last year because I took a chunk of his 401K (so he could get back on his feet after his marriage)...anyway, it's time to start paying again & he won't. So I need to garnish... Thank you for your quick response earlier. Do you think the fact that it's strictly alimony will make any difference as far as possibly hurting his clearance. Thank you.
DeleteI'd put alimony in the same boat with child support but like I said before, government decisions and regulations don't always make sense. While its commendable that you're being so amiable with your ex, you've already stated that your check isn't a priority with him. He's not showing you the same courtesy, and its time to play hardball pure and simple. If he does end up losing his security clearance that isn't your fault, its a choice he made for himself by not paying you what he owes in a timely manner. And you can tell him that if he gets upset over being garnished. This choice was 100% his. Best of luck.
DeleteThank you so much. I appreciate your reply.
DeleteQuick follow up. The papers are getting ready at the court to send to the employer.
DeleteThank you for your follow up. So few people take the time to do that. I would be interested to hear how his security clearance is affected (I doubt it will affect it at all, but if it does that would be valuable information to have for other readers). Either way, you're doing the right thing. Don't let anybody--especially your ex--make you feel guilty for going after what a court has deemed legally yours. Best of luck.
DeleteThank you, the court is taking a little longer than normal. My attorney said that sometimes happens in the summer with furlows and vacations. In June my ex husband sent me one check for literally 1/10 of what he owes. July just ended and I received nothing. I feel like I've finally woken up to how naive I was. I'm so thankful my parents insisted I have an attorney (he didn't have one) and did this right. I will keep you posted, and thank you again for your information and advice.
ReplyDeleteThank you, I will be sure to keep you posted.
ReplyDeleteWhat if I owe less than 1500 dollars in delinquent debt, are my chances of a secret cewrance good... I had this huge spill written but it never posted... two accounts in collections totaling 500 dollars and 1000 in back child support... I pay 3 times in child support than what I am supposed to, and trying to get it reduced...
ReplyDeleteThere is really no way to know ahead of time. If your debts were all consumer debts, I'd guess you'd have a good shot at getting your clearance. But one of your debts is unpaid child support. It's perfectly possible to get into a financial rut and end up $500 in the hole. Being significantly behind on your child support payments--even if you feel the court ordered you to pay too much--could make you appear very irresponsible. No matter what the actual circumstances are, falling behind on your child support carries a stigma that can be hard to crawl out from under. This is definitely an issue you should bring up with your boss or reviewer ahead of time.
DeleteHey Lee,
ReplyDeleteI got into credit problems circa 1999. I joined a debt consolidation program and was able to to pay off the debt because of the program. I overlooked a separate credit card debt that I thought I put into the payment plan, but did not. I recently went to the free credit report site and the $1000 debt does not show up on the 3 credit reports. The other cards that initially were on the payment plan do. When going through a clearance do I release the information about the $1000?
That is entirely up to you. If it doesn't show up on your credit report, then technically there is a strong possibility that you could be unaware of the error--even though its in your favor.
DeleteLegally I can't tell you to lie during security clearance, but consider this: If the debt doesn't appear on your credit report what verification does this company have that the debt is even legitimate and that you aren't simply mistaken about it being included in credit counseling? None. So its possible that opening up about the debt may make little difference if no record exists to prove that its valid.
I can't tell you to lie, but I can tell you that, if it were me, I'd just roll with it and see what happens. There would be no sense shooting myself in the foot if I didn't have to.
Hi Lee,
ReplyDeleteI am applying for federal jobs, some of which require secret security clearance. I am up to all of my payments except for a private student loan that I took out in 2008 which was cosigned by my father. After graduating in 2009, I couldn't find work due to the recession. As a result, I didn't have money to pay off the private student loan and my father didn't help either. The private loan went into delinquency and sent to the collection agency. Fast forward 5 years later, the loan is still on my credit report and won't be taken out until 2016. How will this affect my secret security clearance if I am paying off everything else (federal student loan, car loan, credit card) on a monthly basis except for that private loan? Should I be worried since this private loan happened 5 years ago?
Thanks,
Alvin Sarmiento
Alvin,
DeleteEvery position has different requirements as far as passing the security clearance check. The best you can really do here is to do some research online regarding what the security clearance check looks at for each specific position you're applying for. You should also be 100% honest about the information on your credit report and how it got there.