Yes, settling debt will affect your credit score. The concern for the federal agencies is whether or not the individual is under financial distress. A lot of people ask how bankruptcy will affect their security clearance.
Full Answer
How does debt affect my security clearance?
Though unexpected significant life and market changes can affect your financial situations, it does not always impact your security clearance. In many cases those who were in sudden significant debt due to no fault of their own, but lived within their means, attempted to pay the debt, and sought debt counseling were granted clearances.
Will bankruptcy affect my security clearance?
As with bad credit and problematic debt, the answer about bankruptcy’s impact on security clearances is a perfectly murky “maybe.” A history of financial irresponsibility will be tightly scrutinized in the evaluation process.
What happens if you have a financial problem with your clearance?
This behavior raises questions about loyalty, reliability, and ability to protect classified information. Here are five specific examples of financial issues resulting in clearance denial or revocation. Applicant’s debts include failing to pay federal and state taxes and required child support.
Will my credit score affect my security clearance in the military?
Financial management is available on most, if not all military installations, but military members can also seek debt management or financial advice on their own. Checking your credit score is one of many suggestions for dealing with debt so it won’t affect your ability to get a security clearance.
How much debt is too much for a security clearance?
No branch of the military has a set amount of debt that is the breaking point for security clearance. You could owe $5,000 or $50,000 and be granted or denied clearance. It's all a matter of how you deal with the debt. Responsible behavior in tackling your debt problems is considered a positive.
Does debt affect security clearance?
While it is generally conceded that excessive debt is a cause for denying security clearances, no branch of the military has a set amount of debt that will result in being denied.
What disqualifies you from a security clearance?
These conditions may disqualify you from access to classified information: Drug abuse. Illegal drug possession. Diagnosis of drug abuse or dependence by a medical professional.
Can you get security clearance with credit card debt?
The main concern is that a clearance holder desperate to pay off their debts may try and raise money by selling classified information. At the same time, the mere fact that an applicant has an unpaid credit card balance or medical debt does not automatically disqualify them from holding a security clearance.
What is looked at for security clearance?
The security clearance process typically includes a FBI reference check of former employers, coworkers, friends, neighbors, landlords, and schools along with a review of credit, tax, and police records.
What is considered substantial debt?
The Consumer Financial Protection Bureau recommends you keep your debt-to-income ratio below 43%. Statistically speaking, people with debts exceeding 43 percent often have trouble making their monthly payments. The highest ratio you can have and still be able to obtain a qualified mortgage is also 43 percent.
What does Eqip look for?
e-QIP is a web-based automated system that was designed to facilitate the processing of standard investigative forms used by DCSA and other Investigation Service Providers (ISP) when conducting background investigations for Federal security, suitability, fitness and credentialing purposes.
Who has the highest security clearance?
The federal government provides three levels of clearance: confidential, secret, and top secret. Top secret clearance is the highest security clearance level anyone can get.
What disqualifies someone from top secret clearance?
Top secret clearance holders must have no significant financial concerns. If the background check reveals a considerable amount of debt, missed payments, tax evasion, collection judgments, check fraud, foreclosures, embezzlement or bankruptcies, your application might be rejected.
Does SC clearance include credit check?
The financial checks are mainly for the DV level (DV clearance level) but occasionally at the SC (SC clearance level). Checks will be made with the credit reference agencies and you may be asked to complete a financial questionnaire.
Can I be denied a job because of my credit?
If you are seeking employment, your credit history may be checked and you can be denied employment because of bad credit. Prior to applying for a position, it's a good idea to speak to the prospective employer. You have a right to know if your credit will be checked.
Can debt disqualify you from the military?
If you have unpaid loans which are significantly overdue and/or in collections, you can expect to be denied enlistment until you resolve the problem. A history of bad credit could also affect your security clearance eligibility, which could make many military jobs unavailable to you.
What disqualifies someone from top secret clearance?
Top secret clearance holders must have no significant financial concerns. If the background check reveals a considerable amount of debt, missed payments, tax evasion, collection judgments, check fraud, foreclosures, embezzlement or bankruptcies, your application might be rejected.
Why are security clearances denied?
Whether you are a civil employee, a contractor or in the military, debt is and can be, a major issue in regards to security clearances and career advancement. Check out these stats:
How to show good faith in debt?
Here are some general things you can do to show good faith and that you are taking your debt seriously: Set-up a payment plan with the creditor. Consolidate debt. Continue to make payments on time.
Why can the government increase its frequency of financial audits on current employees?
Due to past events of leaks of secret information and the ease of new technology, the government can now increase its frequency of financial audits on current employees and its reach on background checks for new hires.
Does debt affect security clearance?
Security Clearance: Debt Can Affect Your Ability to Obtain Clearance
Is excessive debt a security risk?
In short, individuals who have excessive and/or delinquent debt are seen to be a greater security risk than those who are more financially stable. The U.S. government has had problems in the past with security clearance holders leaking secret information, either because they were offered a monetary bride, or were financially blackmailed for information. As such, the federal government has established guidelines to red-flag prospective and current federal employees, military personnel and contractors.
Why is cause of debt more important than amount of debt?
In adjudicating these cases the following factors are taken into consideration: Cause of debt is generally more important than the amount of debt, because it reveals more about a person’s reliability, trustworthiness, and judgment. Of people who seek credit counseling, roughly 50 percent are due to irresponsibility.
How is debt response evaluated?
Response to debt is evaluated by the things people do (or don’t do) about delinquent debt. How people deal with debt is often a decisive consideration. Those who ignore their financial responsibilities may also ignore their responsibility to safeguard classified information.
What percentage of credit counseling is due to irresponsibility?
Of people who seek credit counseling, roughly 50 percent are due to irresponsibility. If the debt was caused by irresponsibility (including reckless behavior) that is likely to continue, the problem is magnified.
Why is excessive indebtedness bad?
Excessive indebtedness increases the temptation to commit unethical or illegal acts in order to obtain funds to pay off the debts. Most Americans who betrayed their country did it for financial gain—about half were motivated by a real or perceived urgent need for money and about half by personal greed.
Is total debt considered a security concern?
Amount of debt focuses primarily on the delinquent amount, but as previously mentioned total debt, if it appears excessive, may also be taken into consideration. Significant delinquent debt is a security concern. For total debt there is a rule of thumb used by credit counselors.
Is $5000 worth of debt a problem?
Having $5000 worth of debt isn't a problem. Just about everyone has debt. The most common problem is currently delinquent debt. If your debts were never delinquent, then you have no reason to be concerned about clearance eligibility.
Does debt cause clearance approval?
Debt, alone, does not seem to be what causes an issue with clearance approval. It is what you do with that debt, how often you seem to get into debt, the integrity with which you carry that debt, etc. Having a perceived urgency about your debt can be an influencing factor for many people. It isn't for me, but I cannot expect them to read my mind to find out if I am one of those people or not, so they must try to get a picture from my past and present financial habits and behaviors. Saying that it is discriminatory for the government to use financial issues in determining risk is like saying that banks are discriminating for using your financial history to... determine risk. Financial institutions only need to look into one area of our lives to determine credit risk factors. These guys are looking into many facets at once, and, yes, our financial history is a part of that overall picture.
Why was the applicant denied a security clearance?
The applicant was denied a security clearance because of his bad decision to prioritize other payments above his obligation to the taxes he owed.
Who was granted clearances for debt counseling?
In many cases those who were in sudden significant debt due to no fault of their own, but lived within their means , attempted to pay the debt, and sought debt counseling were granted clearances. Those who ignored the debt and lived beyond their means were not granted clearances.
How much money did the applicant have in delinquent debt?
The applicant had almost a million dollars in delinquent debts that he attributed to the housing market crash. Though he owned several pieces of property they were valued lower than when he purchased them.
What are the debts of an applicant?
Applicant’s debts include failing to pay federal and state taxes and required child support. The unpaid taxes were incurred when the applicant failed to file income tax returns in a timely fashion for many years.
Why did the applicant have to get his finances straight?
He also knew that he had to get his “finances straight” because of his “job and security clearance”. Additionally, the applicant had an unpaid phone bill and ignored payments for over a year until he made arrangements to pay those debts.
What is the Cleared Brief?
The Cleared Brief - Latest security clearance news - delivered monthly. Bad decisions affect the ability to get a security clearance. When it comes to financial mistakes, those bad decisions can linger for years to come. There are many life situations that can cause debt, that are of not fault of the debtor.
Did the applicant show he had resolved two credit card debts?
However, the applicant failed to show that he had resolved two of the credit card debts. The judge ruled against the applicant. Having debts forgiven is not the same as personally paying the debts. The applicant also showed poor judgment in many of his financial decisions.
