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Deal with credit issues and keep a security clearance

Feb. 19, 2014 - 12:19PM   |  
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A security clearance comes with benefits. You can apply for jobs that others can’t reach, and you’ll probably get paid more. But there are hurdles.

Before granting clearance, investigators want to know whether you have drug or alcohol problems. They’ll question friends, relatives and comrades. They’ll investigate whether you have a criminal record, and they’ll almost certainly turn you down if you lie about any of this.

There are career consequences. You can be denied clearance or lose your clearance if you get into financial trouble. That’s bad news for job seekers, and it can even cause problems for those who’ve already landed jobs that require clearance.

“As you apply for a job, whether it is with a government agency or a government contracting company, part of that is going to include a background check, and that will include a credit check,” said Evan Lesser, managing director of

It’s worth noting that issues of security clearance — including financial troubles — extend beyond jobs in the federal government and with military contractors. In fact, clearance jobs can be found throughout the private sector. Amazon, for instance, reportedly has more than 100 job openings for people who can get a top secret clearance.

Here’s how to deal with your credit issues and likely keep your clearance intact.

Get an early jump

Why do employers and investigators care about the money? Simply put, financial trouble makes you vulnerable to corruption.

“When there have been cases of espionage where a U.S. clearance holder has given away classified information, most of the time there is a financial aspect to it,” Lesser said. “It’s pretty much understood that someone who is in dire financial straits is going to be more likely to give up classified information, especially by selling it.”

Before you start applying for jobs, before your clearance comes up for renewal, clean up whatever issues you can, said Alan Edmunds, whose law firm in California and North Carolina works extensively with clearance cases.

Get credit counseling, something that can be done online. It shows a good-faith effort. Get your credit report through TRW or Equifax, and challenge any mistaken reports. Keep any letters and email to show to investigators.

Set up payment plans with any debtors. Investigators want to see that you are on top of the situation.

This raises an important point: While bad credit may scare off any employer seeking cleared talent, the amount may matter less than the effort. Even heavy debt from yesterday can be balanced by a genuine effort to manage today’s situation.

Don't fear bankruptcy

There’s no shame in going bankrupt. Many believe bankruptcy is an inherent game-ender, but the fact is, bankruptcy won’t automatically shut you out of a clearance job.

The Air Force Academy, for example, says “[t]he status of your security clearance can be affected, but it is not automatic. … The security section will weigh whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility.”

Did you go broke because of a medical crisis — or a gambling problem? Investigators understand there is a difference.

“Bankruptcy is a legal resolution of debt,” Edmunds said. It’s not necessarily a cop-out, but rather a way to settle past issues in a fair and reasonable way. Employers may understand this, if given an explanation.

Be up front about issues

This raises a thorny question: To tell or not to tell? For any clearance job, investigators and employers are going to pull a credit report. Should a job seeker state up front that there will be problems, or wait until the bad news breaks?

If you are new to the process, you’ll be filling out the SF-86, the form that is used by military personnel, government contractors and government employees to apply for a security clearance. This is the time to come clean. Give details of the debt, all the how and why.

“The form allows you to be detailed, and the general guidance is that you want to get all the information out there. You don’t want a government adjudicator making a decision based on incomplete information,” Lesser said.

Assuming you win clearance, you’ll still need to tackle credit issues in the job search process. Don’t talk about it in the interview. There’s no need to, and it can bias the potential employer. The employer likely won’t run a credit check until a job offer is made. At that point, it’s typically best to lay the cards on the table.

“It is good to discuss this with the employer,” Lesser said. “The employer wants to understand whether the financial issues were caused by you as an individual or by something that is outside your control. And if you ignore your financial responsibilities, you may also be someone who disregards other responsibilities, like the need to keep classified information safeguarded.”

All this holds true even after you’ve got the job. If your credit goes south, you can lose clearance in your periodic renewal. Moreover, the government requires that any major changes in your finances be reported to an assigned security officer.

Bottom line

Bad credit may hinder your efforts to get clearance or a clearance job, but it’s not an automatic deal breaker. FBI policy, for example: “A poor credit history, or other issues, will not necessarily disqualify a candidate from receiving a clearance.”

Decision makers want to know how it happened, whether it’s getting better or worse, and what you are doing to remedy the situation. Address these, and you’ll significantly improve your chances of taking your career in the direction you want to go.

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