Truths and Myths on Credit Reports for Background Investigations

Much ado is made about credit reports and how they are used in background investigations. Many misnomers are being perpetuated out there, so here is a quick and easy guide as to what information an adjudicator is looking for on a credit report and what may generate a flag or concern.

  • Names, SSNs, employers, and addresses for the applicant listed on credit reports are compared to establish any not listed on the SF-86.
  • Accounts showing a recent pattern or previous history of late payments (even though they may now be current).
  • Collection accounts (even though they may be paid and closed).
  • Write-offs (creditor has given up collection efforts and sold the debt).
  • Current tax liens and bankruptcy (or a history of with new delinquencies).
  • High debt to income ratio when no additional sources of income are known.

Credit scores themselves are not considered by adjudicators and actually, are not even listed on the OPM credit pull. They do see the general overall rating (1-9) assigned, but that is based on the credit history and not a factor if all accounts are current.

Contrary to popular belief, debts that fall off credit reports after seven years are still your responsibility and can be used to deny eligibility for a security clearance if unresolved. You are not magically absolved of these legally incurred debts and must show proof that you acted responsibly in addressing them. A recent DOHA appeals case depicted this exact same scenario and here is a quote from the case summary:

“Applicant argues that the Judge “appears to have used a more recent credit report to identify new debts not captured in [an earlier] credit report, but not highlight debts that no longer appear on my credit report or that I am no longer financially responsible due to the age or validity of the accounts.” However, the fact that a debt no longer appears on a credit report does not establish any meaningful, independent evidence as to the disposition of the debt.”