Obtaining Security ClearanceSecurity Clearance Denial

Financial Issues Still the Biggest Reason for a Clearance Denial

Of the 881 security clearance appeals heard by the Defense Office of Hearing and Appeals this year, the overwhelming majority of denials involve financial issues. Most of the cases are pretty cut and dry because the applicant failed to take steps to mitigate the security concerns. Let’s take a look at what the adjudicative guidelines say about financial considerations and some mitigating factors. Financial issues are broken down into three categories: unexplained affluence; compulsive gambling; and debt.

Unexplained Affluence

This is not a common issue in background investigations, but is still considered a potential security concern from a espionage and counterintelligence point of view. If an individual is living an affluent lifestyle with no apparent means of legitimate income to pay for it then the source of income may be criminal. Credit reports, property purchases, large cash transactions, and other indicators where the cash outflow is greater than the known salary of the individual is a red flag. There may be simple explanations for this that may mitigate the concern and can be verified. For instance, additional income from family business wealth, spouse income, or perhaps an inheritance.

Compulsive Gambling

This security concern has become more prevalent in recent years with more states legalizing gambling and the ease with which to gamble (new technology/online venues). When gambling becomes addictive the individual is unable to stop chasing their gambling losses in the effort to “score the big one”. As with other addictions, compulsive gamblers deny or minimize the impact their actions are causing and try to hide or conceal their losses from family and friends. This makes them extremely susceptible to blackmail and also more prone to lie about it or commit illegal activity such as fraud, theft, or forgery. Mitigation for this issue is recognition of the problem by the individual, completion of treatment and counseling, and time elapsed since the last occurrence. However, as with other addictions, the potential relapses are always a concern and monitoring is key.


What exactly does this mean? Don’t we all have debts? Of course we do! We borrow money in the form of loans, use credit cards, and spend a lot of money on things that we don’t necessarily need. The security concern here is irresponsibility and poor judgment when it comes to making financial decisions and handling obligations. When an individual experiences financial difficulties important factors that adjudicators look at are: what caused the difficulty and what are they doing about it. Most delinquent debts are caused by overextending oneself and not having a financial fallback plan in the event of a major life change. Entering into a financial agreement and following through on it shows the ability to maintain personal commitments. If a credit report shows a history of collections, charge-offs, or late payments that is a red flag indicator of a lack of personal integrity. Opening an excessive number of credit card accounts, all with balances, may indicate a lack of fiscal responsibility or self-control. Having liens, civil court judgments, or multiple bankruptcies may indicate a lack of social responsibility since it ultimately ends up costing creditors and other taxpayers in the long run.

There are some who will tell you as long as the amount of delinquent debt is under a certain dollar amount it will not be an issue. The adjudicative guidelines state “the cause of debts and action taken (or not taken) to pay debts tells far more about a person’s reliability, trustworthiness, and judgment than the amount of debt”.  A key factor considered is this: is the individual making a good faith effort to pay off the debts or have they just walked away from it knowing it will fall off the credit report in seven years? Consideration is also given to whether there are other character issues contributing to the debts such as: lack of candor in disclosing the debts; failure to file taxes as required by law; or other problems like alcohol, drugs, or criminal conduct.


  1. Hello, I have my appointment for Polygraph and medical exam in a few weeks, but a week ago I found out that I was victim of scam/fraud (criminals deposited an authorized check into my checking account). I reported the incident to the FBI.
    Two days ago, i found out the bank reported the crime to the Early Warning Services and now I can’t open any account with any financial institution. I tried to talk to the bank in order to make myself responsible for the overdraft and make payment arrangements but the bank don’t want to talk to me. I’m devastated, I never did any illegal action in my entire life. What else do I need to do? Will I be able to fix my credit?
    I talked to the institution that requires the security clearance and I explained that I was a victim of fraud. The person whom I talked to on the phone told me to go to my appointments (polygraph and medical exams) because they will run their own investigation. Do I need to hire a lawyer?
    Please, I need your advice.

  2. At this stage you should just follow the process and gather any documentation you have to corroborate your claim and be prepared to present the facts as they are.