If you hold a security clearance or are in the process of obtaining one, it’s important to be aware of what is on your credit report and how these negative marks can impact your clearance status. If you work for the government as a military service member or as a civilian contractor, the loss of your security clearance could cost you your job. The purpose of this article is to help you understand how credit reports impact security clearance status and what to do if there is an error on your credit report.

What is a Security Clearance?

A security clearance is a government-granted credential that allows individuals to access classified information. There are three levels of security clearance: Confidential, Secret, and Top Secret. The level of scrutiny that your application will get depends on the level of secrecy you are working under.

How is my credit report related to my security clearance?

Someone’s credit report can provide insights into a person’s financial responsibility and integrity, as well as any potential vulnerabilities a nefarious party could exploit to get trade secrets. Poor credit history or significant debt may suggest that an individual is susceptible to financial pressure or manipulation. This could be a warning sign of risk for illegal or unethical behavior. In addition, any past delinquencies, defaults, or bankruptcies may call into question an individual’s judgment and ability to manage sensitive information or access classified materials. Overall, reviewing a person’s credit report helps security clearance personnel to assess the applicant’s loyalty and decision-making abilities.

What kind of negative information on my credit report can affect my security clearance?

As part of the security clearance process, applicants are required to undergo a background check. The background check includes a review of the applicant’s credit history because creditworthiness is seen as an indicator of an individual’s reliability and trustworthiness. This means that your credit reports with Trans Union, Equifax, and Experian will likely be examined.

During the background check, the credit reporting agencies are contacted to obtain a credit report on the applicant. This credit report is then used to evaluate the individual’s financial history, including credit score, outstanding debts, payment history, and past bankruptcies.

Officials look for several key factors when reviewing credit reports, including:

  • Payment History:
    Officials want to see if you pay your bills on time and whether you have a history of delinquencies. Unpaid debts, such as collections or charge-offs, can raise concerns about your financial responsibility and trustworthiness.
  • Debt-to-Income Ratio:
    Officials want to see if you are heavily relying on debt or if you are going from paycheck to paycheck. This could be a sign that you could be bribed easily.
  • Financial Stability:
    Similarly, officials want to see that you have a stable financial history and are not at risk of financial hardship.
  • Trustworthiness:
    Lastly, officials want to see that you are reliable and can be trusted to handle sensitive information.

How Can Errors on Your Credit Report Affect Your Security Clearance?

If there are errors on your credit report that reflect any of the above scarlet letters, it can negatively impact your security clearance status. Inaccurate information on your credit report, such as an unpaid debt or an account in collections, can raise red flags about your financial responsibility and trustworthiness.

In some cases, even small errors on your credit report can result in clearance issues. For example, a missed payment or delinquency on a credit card can be seen as a sign of financial instability, which may raise concerns about an individual’s trustworthiness and reliability.

Even errors in your biographical information can harm you. Errors in your previous addresses or your social security numbers can cause lead officials to believe that you may have been hiding or lying in your application.

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What Can You Do if There Are Errors on Your Credit Report?

If you notice errors on your credit report, it’s important to take action to have them corrected. The first step is to be proactive and obtain a free detailed copy of your credit report through the FTC’s website, https://www.annualcreditreport.com/index.action

Once you locate any errors, complete either an online dispute or mail in a written dispute to the credit reporting agency that issued the report. The agency is required to investigate your dispute and make any necessary corrections. Make sure to attach any helpful information and mail the dispute via certified mail. Resources can be found on our website at https://barthelbarthel.com/resources/

If you have already applied for a security clearance and notice errors on your credit report, it’s important to notify the agency conducting the background check. In some cases, they may allow you to provide additional documentation to clarify the error.

It’s also important to seek the assistance of a consumer protection attorney who specializes in credit reporting issues. These attorneys typically work at no out-of-pocket cost to you.

Errors on your credit report can have serious consequences for your security clearance. It’s important to monitor your credit report regularly and take action to have any errors corrected as soon as possible. Contact the consumer protection attorneys at Barthel Legal today if you notice errors on your report or if you are experiencing clearance issues related to your credit history.