Will Bad Credit Affect Security Clearance in the IT Industry?
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Will Bad Credit Affect Security Clearance in the IT Industry?

If you want to do IT work for government agencies, you may have wondered, “Will bad credit affect security clearance?” When you apply for security clearance, your financial history and current standing are extensively reviewed. Imperfect financial circumstances, such as bad credit scores, can have a negative influence on your application and potentially cause your security clearance to be denied. However, the dollar amount associated with your financial troubles is usually less important than the reasons behind your financial situation.

Let’s take a closer look at the many factors that can affect your security clearance application, including the influence of bad credit and other financial issues. We’ll also offer our best advice for obtaining security clearance—even if your financial circumstances are not ideal—and advancing your IT career.

What Factors Affect Security Clearance?

When searching for a job in the IT industry, deciding to get a federal security clearance can benefit your career. However, if you decide to apply for security clearance, you should be prepared for a rigorous review of your application. The security clearance process takes into account not only your finances, but also many other aspects of your background, character, and current civilian conduct.

The National Security Adjudicative Guidelines lay out a total of 13 criteria that an individual must meet in order to receive security clearance. These guidelines include evaluating your allegiance to the U.S., past criminal acts and indicators of future criminal conduct, and susceptibility to untoward foreign influence.

Ultimately, the Diplomatic Security Service (DSS) wants to ensure that individuals with security clearance privileges are highly trustworthy. Deciding who receives access to matters of national security is, understandably, not a decision the DSS takes lightly.

How Much Do Finances Affect Security Clearance?

Your finances are one of the 13 factors considered by the Diplomatic Security Service when reviewing your security clearance application. But just how much weight are your finances given when deciding whether or not you should be granted security clearance?

It is difficult to quantify exactly how much your finances affect your eligibility for security clearance. However, it is evident that security clearance guidelines have toughened greatly in the last several years, attributed in part to individuals with security clearance who proved untrustworthy of national security. In light of this, potentially suspicious activities on your record, such as financial blemishes, carry more weight than they once did.


What Financial Situations Affect Security Clearance?

Financial situations like bad credit affect security clearance, as outlined in our infographic.

The specific financial situations that the Diplomatic Security Service will look for, according to the U.S. Code of Regulations, include:

  • Failure to meet past financial obligations. Your record will be examined for past instances when you have been late to meet, or have failed entirely to meet, financial deadlines.
  • Participation in illegal financial activity. The DSS will look into any illicit activity related to finances, such as income tax evasion, embezzlement, and employee theft.
  • Sudden wealth with no apparent source. Even if you do not have any financial criminal acts on your record, a sudden and unexplained windfall of money will look suspicious to the DSS. This is because sudden influxes of money can indicate participation in illegal monetary activity that has yet to be discovered.
  • Financial troubles connected to gambling habits, excessive alcohol, or drug abuse. Evidence that you have regularly spent beyond your means because of a gambling, alcohol, or drug problem could spell trouble for your security clearance eligibility.


Why Do Finances Affect Security Clearance?

Why are personal finances related to concerns about national security in the first place? From a national security perspective, people with high amounts of debt or other financial stressors are more likely to be tempted by criminals offering financial rewards in exchange for privileged information.

Keep in mind that the goal of the security clearance review process is not to call you out on every late credit card payment you’ve ever made or every time you’ve had a drink at a casino. The DSS is ultimately trying to evaluate your entire character in relation to whether or not you can be trusted with sensitive information pertaining to our country.

Will Bad Credit Affect Security Clearance?

As we’ve seen, many aspects of your personal finances are considered when you apply for security clearance. But what about your credit score? Will bad credit affect security clearance approval?

Credit scores are not specifically mentioned in the Code of Regulations as being examined by the Diplomatic Security Service. So when it comes to obtaining your security clearance, there isn’t a clear “cut off” point or range for acceptable credit scores. However, the underlying reasons for your bad credit may or may not affect your security clearance eligibility, depending on what they are.


When Bad Credit Affects Security Clearance

Numerous factors that can affect your credit score are mentioned or implied by the Code of Regulations as well. A credit report showing that you have defaulted on credit cards or loans, for instance, would impact your credit score as well as cause the Diplomatic Security Service to investigate further.

The debt you currently owe—which is another factor in determining your credit score—will also be reviewed during your security clearance application process. Less important than the dollar amount of debt is the percentage of your monthly debt compared to your monthly income, or the percentage of debt that is delinquent.

But what percentage of debt are we talking about? Although the DSS does not issue official numbers on this subject, the Consumer Protection Financial Bureau (CPFB) offers some insights about debt-to-income ratio.

The CFPB argues that, in general, a debt-to-income ratio under 37% is not cause for concern. If your monthly debt is more than 43% of your monthly income, however, that usually puts financial experts on the alert.


When Bad Credit Doesn’t Affect Security Clearance

If you want to obtain a security clearance for your IT career but you’re worried about your financial situation, don’t let that count you out from submitting your application. Ultimately, no matter if you’re worried about your credit score, debt-to-income-ratio, or defaulted loans, the reasons behind those incidents matter far more than the numerical amounts.

It matters, for instance, if your financial problems were caused by circumstances beyond your control. Financial hardships because of lost jobs or health crises will be looked upon with more leniency than financial woes caused by excessive gambling or regularly spending beyond your means.

In other words, being irresponsible with your finances is considered worse in the eyes of the Diplomatic Security Service than simply bad financial numbers.

Our Advice for Imperfect Financial Records

It’s important to underscore the fact that a rocky financial history does not immediately disqualify you from receiving security clearance. The federal employees of the DSS are more interested in determining if you know, or have learned, how to handle your finances responsibly, rather than making sure you have a perfect record.

Just as the reasons behind your financial issues matter, so do the steps you’ve taken to address your financial challenges. If you have taken recent action to mitigate your debt, defaulted payments, or other financial concerns, that shows the DSS that you take personal financial responsibility seriously. Even filing for bankruptcy, if this was a measure taken due to circumstances beyond your control, can be seen as a proactive step to correct your finances.


Tips for Obtaining Security Clearance with Financial Issues

Use these tips for obtaining clearance to avoid letting bad credit affect security clearance eligibility.

Here are our best tips for getting your security clearance application approved, even if you have experienced financial issues:

    1. Make at least the minimum payments on all outstanding debts or loans every month. Even if you have struggled to stay on top of your finances in the past, the DSS wants to see that you are making an effort to stay up to date with your payments now.
    2. Get credit counseling. Seek out a nonprofit organization with credit counselors who can help educate you on debt management and plan a realistic budget. Some credit counselors can even assist you in getting out of debt faster with lowered interest rates and consistent monthly payments. Make sure to choose only reputable nonprofits with proven track records; otherwise, you might unwittingly get scammed.
    3. Gather documentation for all financial hardships and mitigation attempts. At your security clearance interview, the DSS employees will likely want to see all documentation related to your past financial problems. Additionally, if you have taken steps to alleviate your financial hardships, make sure that you document those details. This includes relevant dates, names of individuals or organizations involved, and any other pertinent information.
    4. Review your current credit report. It’s important to obtain a recent copy of your credit report and make sure all of the information is accurate and up to date. Mistakes on your credit report could result in unnecessary investigations that potentially delay your security clearance or get your clearance denied altogether.

When reviewing security clearance applications, context ultimately is most important to the DSS. If you can demonstrate that the financial blemishes on your record were beyond your control, or that you’ve taken steps to correct them, the DSS will be less likely to count you out of the running.

Advance Your IT Career with Sentient Digital, Inc.

A digitized padlock, symbolizing factors like bad credit that affect security clearance eligibility.

Obtaining a security clearance is no small feat. But if you choose to work for Sentient Digital, Inc., we’ll help you navigate the process smoothly.

We provide technology solutions, managed services, and staff augmentation to defense, federal, and commercial clients. Our commitment to innovation and growth means we have a wide variety of exciting opportunities. Not only that, but we are committed to matching our IT professionals with the positions and contracts that best suit their skills, experiences, and ambitions.

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Contact us today to learn more about the exciting challenges and advancement a career at Sentient Digital, Inc. can offer you!