It’s more important than ever for Service Members to actively monitor their credit.
Security clearances and who gets them have made big headlines lately, but the new rules handed down from the Department of Defense don’t just affect high-profile individuals. Many military Service Members, including all officers, will be affected by the new policy. What’s more, new security clearance credit check rules make it more imperative than ever that military personnel and their families maintain financial stability. Otherwise, challenges with debt and credit could result in certain Service Members losing their security clearance.
Can you get a security clearance with bad credit?
Credit checks for granting security clearance are nothing new. In the past, the federal government ran a credit check whenever someone first applied for a national security clearance. Then they performed follow-up credit checks every 5-10 years, depending on the clearance level, according to the CFPB. So, even in the past, a bad credit score would potentially prevent you from receiving a national security clearance.
Now, however, the Department of Defense says they will continuously monitor the financial status of all Service Members with security clearance. This means things like missed payments and collection accounts could result in a Service Member having their security clearance revoked.
How to avoid having security clearance denied due to credit problems
The good news is that the federal government is also updating credit fraud alert and security freeze rules, too. Starting in May 2019, all Service Members will enjoy free credit monitoring. This will allow Service Members to actively monitor their credit without footing the bill for credit monitoring services, which can run anywhere from $30 per month and up.
In the meantime, the CFPB recommends setting a freeze on your credit report. This prevents any lenders from accessing your report unless you grant them individual access. That way, no one can fraudulently open credit in your name because lenders must run a credit check anytime you apply for a loan.
Service Members can also take advantage of free yearly credit reports through annualcreditreport.com. You can download your reports from each of the three credit bureaus (TransUnion, Equifax, Experian) for free once every twelve months. This allows you to see what anyone who checks your credit will see. You want to take note specifically of any negative items listed in your report. These are not only bad for your credit, but they could also lead to security clearance revocation if you have too many issues. If you find negative items that you believe are mistakes – i.e. the negative information that shouldn’t legitimately be there – then you need to go through credit repair.
There is also an active-duty fraud alert for military Service Members, which lets the credit bureaus know you are serving. This stops pre-approved credit card offers, so no one can steal a Service Member’s mail to commit fraud while they’re away.
Once the new credit monitoring rules for Service Members go into effect in May, all Service Members – particularly anyone that may face a security clearance credit check – should take advantage.
Avoiding debt problems that could lead to a bad security clearance credit check
“Free credit monitoring for Service Members is extremely beneficial because it allows you to avoid security clearance issues that could potentially be brought on by credit fraud or identity theft,” says Maria Gaitan, Military Outreach Coordinator for Consolidated Credit. “But credit monitoring does not automatically guarantee that you encounter any security clearance credit check issues. If you run into debt problems that cause you to miss payments or you have accounts that go into collections, it could affect your clearance as well.”
Gaitan says this makes it even more imperative for Service Members and their families to follow all the best military money management practices. Military households need to be able to manage debt effectively, as well as be able to budget and save to avoid taking on additional credit card debt. Transitions like PCS and either leaving or returning from deployment are particularly high-risk times for financial challenges. Service Members need to do their due diligence to avoid potential issues that could affect their ability to do their job.
Don’t let debt affect your ability to serve! Consolidated Credit offers specialized debt help for Service Members and Veterans.