A sampling of Defense Office of Hearing and Appeals (DOHA) security clearance hearings from 2007 showed that about 50 percent of clearance denials involved “Financial Considerations.”  This was two times greater than the next most frequently listed issue for clearance denial.* Guideline F: Financial Considerations is one of 13 criteria listed in the Adjudicative Guidelines For Determining Eligibility For Access To Classified Information.

Excessive indebtedness increases the temptation to commit unethical or illegal acts in order to obtain funds to pay off the debts.  Most Americans who betrayed their country did it for financial gain—about half were motivated by a real or perceived urgent need for money and about half by personal greed.

Aside from compulsive/addictive behavior, deceptive/illegal financial practices, and unexplained affluence, the remaining potentially disqualifying conditions detailed in Guideline F can be boiled down to one security concern—delinquent debt.  High debt to income ratio and excessive indebtedness are listed as a potentially disqualifying condition, but this rarely comes into play absent any past or present delinquent debt or obvious signs of unexplained income.  Low credit scores are not listed as a potential disqualifying condition, because factors unrelated to debt affect credit scores.


Delinquent debt is by far the most common financial concern.  In adjudicating these cases the following factors are taken into consideration:

  • Cause of debt
  • Response to debt
  • Amount of debt

Cause of debt is generally more important than the amount of debt, because it reveals more about a person’s reliability, trustworthiness, and judgment.  Of people who seek credit counseling, roughly 50 percent are due to irresponsibility.  If the debt was caused by irresponsibility (including reckless behavior) that is likely to continue, the problem is magnified.  If the debt occurred due to situations beyond the applicant’s control and the applicant is handling the debt in a reasonable manner (including bankruptcy or debt consolidation), the significance of the problem is substantially reduced.

Response to debt is evaluated by the things people do (or don’t do) about delinquent debt. How people deal with debt is often a decisive consideration. Those who ignore their financial responsibilities may also ignore their responsibility to safeguard classified information.  Classic indicators of irresponsibility and unethical behavior are:

  • Changing addresses without notifying creditors
  • Failure to take reasonable measures to pay or reduce debts
  • Knowingly issuing bad checks
  • Increased credit card use immediately before filing for bankruptcy

The words, “bankruptcy” and “credit counseling” do not appear anywhere in the Adjudicative Guidelines.  This is because both bankruptcy and credit counseling can be considered positive efforts to get one’s finances under control.  What is important is the underlying reason for the bankruptcy or credit counseling.

Amount of debt focuses primarily on the delinquent amount, but as previously mentioned total debt, if it appears excessive, may also be taken into consideration.  Significant delinquent debt is a security concern.  For total debt there is a rule of thumb used by credit counselors.  If an individual’s minimum monthly payments for consumer credit (excluding credit cards that are paid in full at the end of each billing cycle and mortgages on primary homes) totals more than 20 percent of monthly take-home pay, there is a financial problem. This does not apply to unmarried military personnel who live in barracks and eat in mess halls and others who are similarly situated.  According to Office of Personnel Management (OPM), Federal Investigative Notice No. 06-07, OPM does not automatically expand investigations for financial issues, unless:

  • Credit report reflects current aggregate delinquent debt totaling $3,500 or
  • Bankruptcy within the past 2 years or
  • Bankruptcy within the past 3 to 5 years with evidence of current credit problems.

This does not mean that delinquent debt totaling less than $3,500 is not significant, but it does suggest that, absent any aggravating circumstances or other security issues, the government is not overly concerned about small amounts of delinquent debt.  OPM considers bankruptcy only as a trigger for further inquiry.

* Guideline E: Personal Conduct was cited in about 45 percent of the cases, but was usually a issue involving falsification directly related to other adjudicative criteria.

Copyright © 2008 by Last Post Publishing. All rights reserved.

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William H. Henderson is a former Army Counterintelligence Agent and a retired federal clearance investigator. In 2007 he began helping clearance applicants from the pre-application stage through representation at hearings and appeals. Since 2012, he’s been the Principal Consultant at the Federal Clearance Assistance Service (FEDCAS). His first two books on security clearances have been used at five universities and colleges. He recently published the 2nd Edition of Issue Mitigation Handbook. He’s contributed scores of articles to, and he’s been retained as an expert witness in several state and federal lawsuits.