Can Financial Problems Impact Your Security Clearance

Posted by TC Mitchell
Security clearance finances

For most people there is a clear separation of personal and professional decisions, as long as they do not adversely affect one’s ability to do their job. But for those who hold a security clearance, many more aspects of their personal decisions are going to be scrutinized. Criteria to determine one’s suitability and trustworthiness to handle protected information are the normal protocol for working in this industry. Determining how well you handle your personal finances is one of the concerns when assessing risk. This can become a significant issue during your background investigation, if you are not proactive.

The Weight of Financial Concerns on Your Clearance

A concern about one’s financial situation may impact the ability to obtain a clearance if the subject shows an inability or unwillingness to pay their financial obligations. The concern is that a failure to live within one’s means, satisfy their debts, or meet financial obligations can indicate a lack of judgment or self-control. And so this raises a question about that person’s trustworthiness and ability to protect classified information. Financial issues might also make one susceptible to being targeted by those that desire what that person has access to. This is a great risk—and in some circumstances, people have engaged in illegal activities to satisfy those debts when they were financially overextended.

In my experience, most people with clearances strive for financial perfection as the goal, but financial burdens can occur in anyone’s life. This is understood and is considered in the process to deny or grant a clearance. The bottom line is, most people have debt. The delinquent debt is the concern—not what one pays on time. How you handle your delinquent debt is one part of your reliability and level of trustworthiness, so make sure you’re proactive with your finances if ever you are having issues.

Take Control of Your Finances

Being proactive means getting a copy of your credit report. You are allowed three free per year from each crediting agency. And you can visit to obtain all of them for free. Being proactive also means making calls to your creditors if you’re falling, or have fallen behind. Again, you might have $1M in debt – but don’t allow it to fall into delinquency and stay that way. How do you resolve delinquency? You simply pick up the phone and have a conversation with your creditors. Explain your current financial situation and set up a payment arrangement. Once you are on a payment plan that you keep current, that is a positive for your credit report. It indicates that you hold yourself responsible for your actions, by taking the necessary steps to become current.

Ideally you should try to resolve any kind of delinquency and get on a payment plan within 30-60 days of falling behind. Less than 30 days is ideal, but life happens and perhaps you put off the call to your creditors because you thought you’d be able to catch up. Of course you should have these conversations as soon as possible, to be a responsible debtor and for your own peace of mind. But you should not allow delinquencies to reach 90 days if you can help it. Always call your creditors sooner rather than later to show you are reliable.

Stay on Top of Your Situation

It’s also a good idea to make note of the actions you took to resolve your situation, such as when you called your creditors to address your financial issues. When it’s time for your next investigation you want to be able to show those records. An investigator is likely going to contact that creditor anyway to get a record of when you called, but it’s nice for you to have and might help move things along.

As far as self-reporting is concerned, you are not required to tell your security officer that you’re 60 days behind on a bill. If you’re worried, you can ask them questions. They are certainly a good resource regarding your clearance, but you would need to be pretty underwater with all of your debts and considering bankruptcy for your situation to be of great concern to your facility security officer. Circumstances that you would be obligated to self-report are much more serious situations such as preparing to file for bankruptcy or losing your house to foreclosure. Falling behind on a credit card payment is much easier to resolve so I reiterate, stay in contact with your creditors.

A Real World Example

Let’s take a look at a recent case about the adjudication of a security clearance, in which financial concerns required mitigation.

Case Number: 19-01057.h1

In this particular case, the DoD had intent to deny eligibility for an individual’s security clearance, under Guideline F, financial considerations, due to six collection accounts, delinquent Federal income tax, and a state tax lien. The individual requested a hearing.

Findings from the hearing showed that he initially fell behind financially after returning from overseas, where he served on active duty and later as a civilian contractor. After returning to the U.S. his new job’s salary was much lower than his previous income, and cost of living and child support contributed to his inability to meet his financial obligations. He provided satisfactory evidence addressing his financial difficulties, showing he had been repaying his tax delinquencies and other debts. He also lowered his living expenses by moving to a new home that required $1,000 less rent, giving him more income to put towards his debt. He reduced his debt by the hearing date, had payment plans in place, and was not receiving calls from creditors asking for payment.

The analysis noted in this case states that “an applicant is not required to establish that he has paid each of the delinquent debts in the SOR. An applicant needs to show that he has a plan to resolve his debts and that he has taken significant steps to implement his plan.1” The applicant sufficiently demonstrated that his finances were under control and left no doubts about his reliability and trustworthiness. The concerns were mitigated and he was granted eligibility by the judge.

This is a great example of the whole-person concept in action, which allows an evaluation of an individual to be based on their conduct and the circumstances surrounding the issue. I’ve found that the government wants you to mitigate concerns and problems. Federal contractors and personnel are valuable to the government’s work. Being proactive on your debts and showing responsibility is really all you need to do. Call your creditor and show that you are at least staying on top of the situation and attempting to get ahead of it. So always communicate to your creditors and be proactive about your financial situation. It doesn’t have to cost you your job.

Source: Case Number: 19-01057.h11

TC Mitchell

Security Consultant | Clearance Analyst | Federal Contractor Business Secrets Podcast | Washington, DC. Contact me at [email protected]


This entry was posted on Wednesday, July 29, 2020 3:35 pm

2 thoughts on “Can Financial Problems Impact Your Security Clearance”

  1. I got myself into a lot of credit card debt after my divorce. I was fine with payments but used a debt relief program which caused many of my cards to go seriously delinquent or into collections while the debt relief company negotiated settlements with my creditors. All of the creditors have settlements in place, and I am making regular payments to the debt relief company. If completely honest about my issues on the SF-86 and in any interview, what are the chances of obtaining TS/SCI, which I held before?

    1. Lowell, it sounds like you’ve already taken some steps in the right direction by getting on a payment plan, so all hope of obtaining a clearance again is not lost. When disclosing your financial issues you want to also advocate for yourself by providing mitigating factors to allay the government’s concerns. These are the mitigating conditions for Guideline F that will bolster your chances of obtaining a clearance:

      (a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment;
      (b) the conditions that resulted in the financial problem were largely beyond the person’s control (e.g. loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances;
      (c) the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;
      (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;
      (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue;
      (f) the affluence resulted from a legal source of income.

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