Financial Security Concerns for Clearance Holders

By John V. Berry, Esq.,

Financial considerations security concerns are the most common issues which can result in the inability to obtain or the loss of a security clearance. As a result, it is very important that when a clearance applicant or holder runs into financial issues that they have counsel to assist and advise them with respect to the security clearance process.  In security clearance cases, financial issues are generally referred to as Guideline F cases. In Guideline F cases,  the government’s concern is generally focused on how a person has handled his or her finances and/or his or her vulnerability to financial manipulation given a pattern of overspending or debt.

The criteria in Guideline F cases has somewhat changed over the last year with the introduction of Security Executive Agent Directive (SEAD 4) (the new Adjudicative Guidelines governing security clearances).  This article discusses some potential tips for those facing financial concern issues in the context of a security clearance matter.

The following are 8 tips to help an individual minimize their risk of losing a security clearance on the basis of financial considerations:

1. Stay Current on Debts and/or Make Arrangements with Debtors. Most security clearance clients seek our assistance when they have had multiple bills that are past due, delinquent, in collections, or have been charged off. In some cases, the debts have been ignored.  In Guideline F cases, the existence of multiple, unpaid debts seems to be the most usual reason for the loss or denial of a security clearance.  It is important to gain control of your finances in such situations in order to attempt to keep your security clearance.

2. Pay and File your Taxes. Individuals in tax trouble or who fail to pay and/or file their taxes take a big risk in losing their security clearance. Tax issues tend to be viewed as more significant for security clearance purposes than regular debts because they are owed to the government.  If outstanding taxes or tax liens are too much for the individual to pay off all at once, it is important to try to work out a resolution plan with the IRS or state tax agency and show good faith towards resolving these debts in order to keep or obtain a security clearance.  The government takes a very skeptical view of a clearance holder or applicant that has not resolved their taxes or at least attempted to do so.  SEAD 4 also provides a new defense to mitigate a security clearance financial issue involving taxes when there is evidence that the taxpayer has sought to resolve the tax issues.

3. Keep an Eye on your Credit Report. Often times, an individual has encountered difficulties in the security clearance process because incorrect information is listed on his or her credit reports. Errors in credit reports are quite common. However, these errors can also lead to security clearance denials or other issues being raised by the Government. As a result, it is important for an individual applying for or holding a security clearance to keep a watchful eye on his or her credit report for errors and potential problems.  If a debt is inaccurate, it is important for an individual to dispute the debt as soon as possible and keep records of all disputes and efforts to demonstrate that a debt does not belong to an individual.  Sometimes, we have had clients write letters to supposed debtors asking them to show proof of debt.

4. Work with Creditors. It can be easy to ignore a creditor, especially where the debt was part of a dispute, but it is always better for a clearance holder or seeker to get ahead of his or her credit problems than to wait until he or she receives notice of a possible denial of a security clearance. An individual who recognizes a debt problem or allegation early and works towards resolving it early and before a clearance issue is raised tends to be given more credit towards the granting of the clearance as opposed to an individual who starts the process after he or she receives notice of the potential loss of the clearance.  Even if a creditor is non-responsive, it is important to try multiple times to communicate with the creditor in an effort to resolve these issues.  The key is to document (and keep copies) of the individual’s attempts to document attempts to resolve a debt.

5. Don’t Overspend: Having too many debts can put an individual at risk of losing a security clearance. If an individual is living beyond their means, this can be a security concern and potential coercion. To the government, overspending can indicate that the individual is living beyond his or her means or could be susceptible to foreign financial assistance.

6. Credit Counseling and Classes Can Help: If an individual falls behind in his or her debts, or taxes it is still important to show how that individual is working (or has worked) to get back on a healthy financial track in order to alleviate concerns about the individual’s ability to hold a security clearance. Taking meaningful credit classes or engaging in credible credit counseling can help mitigate security concerns by showing the affirmative steps taken by an individual to get better control over his or her finances and be responsible with their finances.

7. Report Major Financial Issues to Security Officers:  If and when major financial issues arise, it can be important to report them, in advance, to an individual’s security officer. Doing so in appropriate situations can be used as evidence of mitigation for security concerns. For example, if a bankruptcy arises, that is an important issue that should be raised with a security officer.

8. Demonstrate Financial Stability: When and if security concerns under Guideline F arise, be prepared to demonstrate that the individual lives within their means, has developed a policy for dealing with spending and debt (e.g. budget planning). The more that an individual can show that they live within a manageable financial lifestyle, the better.


When facing financial consideration security concerns it is important to have the assistance and advice of counsel.  We represent individuals in security clearance and other employment matters. If you need assistance with a security clearance issue, please contact our office at (703) 668-0070 or at to schedule a consultation. Please also visit and like us on our Facebook page.

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