How Obtaining Security Clearance May Impact Your Credit Score

While the intense financial scrutiny of a security clearance investigation might seem like it would tank your credit score, the process itself typically has no direct impact on your numbers.

1. Initial Authorization: The process begins when you authorize a background check, granting investigators access to your financial records, including a detailed pull of your credit report from major bureaus.
2. The Credit Inquiry: Investigators perform a credit check. Crucially, this is usually a "soft inquiry" for employment screening, which is not visible to lenders and does not lower your credit score.
3. Identifying Financial Red Flags: The review focuses on identifying potential security risks, such as significant debt, payment delinquencies, accounts in collection, or judgments. These are viewed as potential points of leverage against you.
4. The Score Connection: The red flags that can jeopardize your clearance (late payments, high credit utilization) are the exact same factors that have already negatively impacted your credit score, creating an indirect link.
5. Required Financial Action: If concerns are raised, you may need to address them by paying off debts or creating payment plans. These actions can, in turn, influence your credit score over time.

How Much Will Getting Security Clearance Affect Your Credit Score?

While the security clearance process itself doesn't directly lower your credit score, the financial review is thorough. Here are several key factors that investigators consider, which are closely tied to your overall credit health.

• Credit Inquiries. The background check is a soft inquiry on your credit report and does not affect your score. However, multiple recent hard inquiries from new credit applications can suggest financial instability to investigators.
• Financial History. Investigators scrutinize your payment history for delinquencies, collections, or bankruptcies. These existing negative marks on your credit report are significant factors in the adjudication process for obtaining clearance.
• Debt Levels. A high amount of debt relative to your income can be viewed as a potential vulnerability or sign of financial irresponsibility. This financial pressure is a key concern for investigators, regardless of your payment history.

How You Can Avoid Security Clearance Affecting Your Credit Score

Know It’s a Soft Inquiry

The credit check for a security clearance is a soft inquiry. Unlike hard inquiries from loan applications, soft pulls don't affect your credit score. They are only visible to you on your credit report, so there's no negative impact on your creditworthiness for lenders to see.

Regularly Check Your Credit

Proactively monitor your credit reports from Equifax, Experian, and TransUnion. This helps you confirm the security check was recorded as a soft inquiry. If you spot an error, such as it being listed as a hard pull, you can dispute it with the bureau immediately.

Ways to Improve Your Credit Score

Your credit score isn't set in stone; with consistent effort and positive financial habits, it can always be improved. There are several proven methods you can use to boost your creditworthiness over time.

• Establish automatic bill payments. Since payment history is the most significant factor in your score, automating payments is a simple way to ensure you never miss a due date.
• Reduce your credit utilization ratio. Aim to keep your total balance below 30% of your available credit, as this is the second most important component of your score.
• Monitor your credit reports regularly. Checking your reports allows you to spot and dispute any inaccuracies or signs of identity theft that could be harming your score.
• Become an authorized user. Being added to a credit card account with a long, positive history can help you build your own credit profile.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as revolving credit from cards and installment loans.
• Limit hard inquiries. Applying for too much new credit at once can temporarily lower your score, so it's best to space out applications.

The Bottom Line

While a security clearance investigation includes a credit check, it is considered a soft inquiry. Therefore, the process itself will not negatively affect your credit score.

Frequently Asked Questions

Will a security clearance check lower my credit score?

No, the credit check for a security clearance is a soft inquiry. Unlike hard inquiries for new credit, it does not impact your credit score.

Can I get a security clearance with a low credit score?

Yes, a low score isn't an automatic denial. Investigators consider the context behind your score and any efforts you've made to resolve financial issues.

What credit issues are most concerning for a security clearance?

Significant unpaid debts, accounts in collection, charge-offs, and recent bankruptcies are major red flags as they can indicate financial irresponsibility or potential vulnerability to coercion.