The Consumer Financial Protection Bureau, the federal agency responsible for financial consumer protection, issued new guidance warning of the career implications on service members who may be subject to continuous evaluation as the Department of Defense looks to take over and automate the reinvestigation program.
“Following a number of publicized security breaches, the President of the United States issued a directive that all federal employees (including servicemembers) in national security positions shall be subject to continuous evaluation,” a press release issued by the CFPB notes.
The policy isn’t necessarily anything new (a third of all security clearance holders are already subject to continuous evaluation), but the scope and scale of continuous evaluation continues to grow as the Defense Security Service looks to take over the background investigations program, and rolls the assets of the National Background Investigations Bureau into the DoD. With no change in the adjudicative criteria, continuous evaluation shouldn’t necessarily result in more security clearance denials and revocations. But it absolutely could, as information that should have been self reported by the candidate but wasn’t, or information that would otherwise only come up during a five-or-ten year reinvestigation, can now be reported to the government in real time.
Applicants lose the advantage of passage of time in mitigating a poor financial decision. Credit issues may be immediately reported to the government, and poor financial decisions that tank your credit score may be used to justify a security clearance revocation.
The CFPB notice comes on the heels of separate reporting that the Trump Administration is considering making changes to the Military Lending Act. As ClearanceJobs contributor David Brown reported:
The Military Lending Act was signed in 2006 to protect service members and their spouses from predatory financing. The Consumer Financial Protection Bureau explains that the act caps loans at 36-percent; it protects service members from signing away their rights under consumer protection laws; it forbids mandatory payments deducted from paychecks; and it eliminates early-payoff penalties. In short, it protects service members from loans essentially designed to accumulate penalties and fees, and aimed at a young and brash but sometimes naive demographic.
According to documents obtained by National Public Radio, some of those protections might soon disappear. The auto industry has lobbied hard for a more generous interpretation of the Military Lending Act, and the Trump administration has been listening. The administration, according to NPR, has sent a revised policy to the Defense Department for review. This policy allows lenders to roll questionable fees into loans. Moreover, the Consumer Financial Protection Bureau is set to lessen oversight of payday lenders. These changes haven’t yet been put into force, but if they are, security clearances will be at risk.
It’s clear the CFPB is putting federal employees and service members on notice: make sure you maintain careful track of your finances, or your security clearance and military or government career could be at risk. In that vein, they offered these four tips to make sure your credit doesn’t harm your security clearance:
1. Check your credit report
You are entitled to a free credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian, and TransUnion), which you can access at AnnualCreditReport.com . This is the only authorized source under federal law that provides free credit reports from the three major national credit reporting companies. You can dispute any item on your credit report you know to be inaccurate, and the companies are required to conduct a reasonable investigation upon notice of a dispute. Other websites that promise free credit reports may require you to sign up for “free trials” that eventually charge you or try to sell you other products or services you may not need.
2. Consider setting up a fraud alert or security freeze
Recent legal changes will provide servicemembers with free credit monitoring in the future to help better protect their credit record. This law takes effect in May 2019, and in the meantime, you can still contact Equifax, Experian, and TransUnion and ask them to put a freeze on your credit reports. A freeze prevents prospective lenders from accessing your credit file unless you lift the freeze for that lender or for a specified period of time. There is also a special “active-duty alert” available to servicemembers on active duty who are assigned to service away from their usual duty station. The alert notifies credit reporting companies of your military status and limits new credit offers while you’re away.
3. Monitor your credit score
There are numerous credit-reporting services that provide free credit scores, but servicemembers and their spouses can get a free credit score courtesy of the Financial Industry Regulatory Authority (FINRA) investor education foundation. This free credit score is intended to help you understand how your decisions alter your score in a positive or negative way. Get your free credit score by contacting a personal financial manager at your closest military installation .
4. Call in reinforcements
If you believe that your credit record is inaccurate, you can try to clear it up with the company that reported that information and the major credit reporting companies. You can also submit a complaint to the Bureau online or by calling (855) 411-2372.
The Office of Servicemember Affairs is dedicated to aiding servicemembers, veterans, and their families with their financial challenges throughout their military financial lifecycle. It’s part of our mission and we are honored to help those who answered the call of service on behalf of a grateful nation. To stay connected to our work, sign up for updates on our website.
Bottom line: Continuous evaluation allows the government to know your credit score and status in real time. If you don’t have a strategy of keeping track of your finances, now is the time to start. With financial issues continually the number one cause of security clearance denial and revocation, there’s no excuse not to pay attention to your financial health, and take proactive steps to get your credit health in check.
