Many people who require a security clearance for their jobs run into problems due to financial difficulties. Under the Department of Defense’s guidelines, the “failure to live within one’s means, satisfy debts, and meet financial obligations” may be cited as grounds for rejecting or revoking a clearance. The main concern is that a clearance holder desperate to pay off their debts may try and raise money by selling classified information.
Judge Finds Applicant “Mitigated” Concerns Despite Not Addressing Unpaid Debt Earlier
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. The Defense Office of Hearing and Appeals (DOHA) will consider any “mitigating conditions.” But the burden is on the applicant, not the government, to show mitigation is warranted.
Here is a recent example where this occurred. In this case, a DOHA administrative judge granted an application to renew a security clearance despite the applicant’s financial considerations. The applicant here is a 65-year-old man who previously served in the Navy. For the past 14 years, he’s worked as a mechanical technician for a defense contractor.
While seeking to renew his security clearance, DOD officials raised concerns over the applicant’s credit card debt. Specifically, the applicant defaulted on a debt of $17,143 in 2013. The applicant explained that his wife had become seriously ill around that time. As a result, she sustained a loss of income, and the applicant was forced to use the couple’s credit card to pay for household expenses.
Eventually, the credit card company charged-off the account. However, after this issue was raised during the review of the applicant’s security clearance, he arranged for a monthly payment plan of $100 per month for 172 months.
The administrative judge was satisfied with this resolution. The judge further noted the applicant had no other history or defaulting on debts, i.e., this was a one-time issue due to his wife’s “serious illness and loss of income.” At the same time, the judge said the applicant’s failure to address this issue back in 2013 did raise legitimate concerns “about his reliability, trustworthiness, and judgment.”
That said, the evidence as a whole weighed in favor of granting the security clearance. This was simply a case where a “mature individual [] experiences a life-changing event without any serious financial consequences.”
Speak with a Maryland Security Clearance Attorney Today
Before you apply for a security clearance, it is critical to carefully review your finances. If you have any old, outstanding debts, it is best to address them upfront. Under no circ*mstances should you try to hide or make excuses for the debt. Where there are legitimate reasons for the debt, such as a sudden illness, make sure you properly document them, as they may provide the necessary proof of mitigating factors to protect your clearance.
An experienced Maryland security clearance lawyer can provide you with further guidance and assistance. Contact Henault & Sysko Chartered today at 410-768-9300 to schedule a consultation.
Source:
ogc.osd.mil/doha/industrial/2020/19-01328.h1.pdf
https://www.hsclaw.com/suitability-and-fitness-determinations-how-they-differ-from-security-clearance-actions/
By Henault & Sysko Chartered | Posted on June 12, 2020
FAQs
When renewing a security clearance, the government will conduct a background investigation that evaluates your current financial situation and overall level of financial responsibility. The government will consider factors such as your payment history, your current debt, and your efforts to resolve any past issues.
Can I get a security clearance with credit card debt? ›
Is There a Debt Limit to Obtain 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.
Can bad credit affect secret clearance? ›
If you want to pursue a military career, your most significant obstacle may be your credit history: in many cases, financial issues are the leading cause of security clearance denials for most candidates and can make it very hard to get a military security clearance with bad credit.
What disqualifies you from security clearance? ›
What can disqualify you?
- You are not a U.S. citizen.
- You were dishonorably discharged from the military.
- You are currently involved in illegal drug use.
- You have been judged as mentally incompetent or mentally incapacitated by a mental health professional.
- You have had a clearance revoked for security reasons.
No, a debt collector cannot revoke your security clearance. However, failing to pay debts on time can result in negative information on your credit reports and may cause your security clearance to be pulled when it's up for review.
Can you be denied a security clearance because of debt? ›
While it is generally conceded that excessive debt is a cause for denying security clearances, no military branch has a set amount that will result in being denied.
Does credit card debt show up on background checks? ›
Recent employment history* Verification of name, address, and social security number. A summary of active accounts and credit lines. Any debts incurred, including credit card debt, mortgage and car payments, and student loans.
What is considered excessive debt? ›
Most lenders say a DTI of 36% is acceptable, but they want to lend you money, so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you have too much debt. Others stretch the boundaries up to the 49% mark.
What credit report is used for security clearance? ›
Pre-employment credit reports are more often used for jobs that involve security clearance, access to money, or confidential information.
Why would you not pass a security clearance? ›
More specific conditions that may endanger your security clearance include: A history of deceptive or illegal financial acts like embezzlement, tax evasion, and fraud; Failure to satisfy your debts; and. Financial problems caused by gambling, drug abuse, or alcohol abuse.
Many security clearance applications are denied due to specific financial concerns. For example, large quantities of debt that are potentially unmanageable or unpaid taxes are both considered red flags.
How often do security clearances get denied? ›
Security Clearance Denial Appeals
Approximately 1% of applicants are denied a security clearance.
How far back does secret clearance go? ›
Security Clearance Adjudicative Process
The clearance process for Secret level access uses an investigation called the National Agency Check with Law and Credit that goes back five years, while the clearance process for Top Secret uses a Single Scope Background Investigation that goes back ten years.
Does owing taxes affect security clearance? ›
If you are an interested candidate pursuing a security clearance and owe back taxes, have a lien on your property because of unpaid taxes, or have failed to file for tax returns, these issues should be taken care of before applying for a security clearance.
Can spouse debt affect security clearance? ›
Your spouse being behind on debt payments does not have to kill your chances. If none of the accounts in your own name show a poor credit history or delinquency, then your spouse's poor credit will not likely affect your security clearance application.
Does security clearance check your phone? ›
Emails, Internet Histories & Other Virtual Assets
For what it's worth, security clearance background investigators also don't bug phones or conduct surveillance on applicants, so you can rest a little easier knowing your every move isn't necessarily being watched.
How much debt is too much to join the military? ›
There is no standard approach among the military branches when it comes to screening for financial troubles among its applicants and members. The Air Force looks for a history of bankruptcy or bad credit and has a debt-to-income ratio limit of 40%.
Do security clearances check bank statements? ›
A Top Secret security clearance doesn't require one to turn over this level of documentation - they just pull credit reports, which show active and closed lines of credits, balances, etc. Depends on where you are working with that clearance. Some agencies require an annual report of all bank and credit card statements.
