Settled debt for secret

Will settled debts that went to collections affect my security clearance? One was 5 years ago for 420 dollars for a credit card bill I forgot about. I settled this debt a couple of years ago. The other was for an educational debt 3 years ago that my parents told me they were paying but then hit financial hardship and could not pay. I settled this debt as soon as I could, which was about 6 months ago but not for the full amount. I now have a credit card I pay in full every month and have been paying my school loans on time every month. My credit score is a 691 and rising.

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What does “settled” mean? I think there may be a concern if you somehow just walk away from a debt, and the creditor just writes it off. But I don’t think that same concern exists if you “settled” by paying some reduced amount.

It will definitely “affect” things in that it will take some extra time for the investigator to dig into all this and verify the details. But since everything seems to be taking so long these days you might not even notice.

You are correct in that they do want to know about debts that went to collections. But it sounds like you did the right things with these and are on solid ground now. I don’t know if anyone else can weigh in with more authoritative info.

By settled I mean that I paid it off for a lesser amount and now it shows a “0” balance.

This should not affect you ability to get a clearance. You have no delinquent debt and used a legal remedy to resolve previous ones. As long as you avoid this going forward you are good to go!


Generally speaking there is no magic FICO score that guarantees a clearance. Average credit ranges from 630 to 680. If you are below 630, you have dings. If you are below 500…you have damage. I normally feel comfortable sending forth a package if a person is a 650 or higher. 650 is “fair,”’ and some classify 680 as “good”.

Addressed and unaddressed debt is the bigger picture. Any of us, cleared or not, can have an unknown debt go to collection (myself included). The ticket is resolving said debt upon discovery. Moving it from unaddressed to addressed. The SF86 is set up to walk you down a path of yes I have this late or unpaid debt, and here is my repayment plan. Not plan to get into a repayment plan, but here is the monthly payment moving forward. I recommend applicants check their scores to make sure there are no surprises, look at creditor listing and challenge anything not related to you, pay off any low hanging fruit bills of $15 or $25, and then get into a re-payment plan on bigger ticket items. Consistently making payments on time and not exceeding normal debt to income ratios will quickly make scores rise with the newer formulas.

Hi, I have a question about financials on a Periodic Review. I had 3 credit cards go into a charge off status a year ago due to medical issues my wife has, long story short, my wife and I got married in 2015 and she was on my insurance at that point, before that she was on state insurance. Neither of us knew the cost that would come from medical. Due to this and my income being the only one in the household to take care of 3 people my credit cards were put on the back burner and went into charge off. I have since paid the 3 accounts off and settled them. I have also spoken with a credit counselor about budgeting and credit cards. My wife has applied for SSDI and we are currently going through that process, since August 2016. I have a current payment plan through the IRS to pay my last years taxes, no liens or defaults on that plan paid monthly. Before we got married my credit was fine, no issues, paid off 2 car loans in full and made payments on the 3 credit cards. I have also reduced or eliminated unneeded services to increase income in the household. Just wondering what to expect next. Thank you for your help.

It sounds like you have responsibly addressed the delinquent debts that happened due to an unforeseen life event. The only thing that might be an issue is this: as a clearance holder it is incumbent upon you to self report debts that are 120 days delinquent. This keeps your security officer in the loop so there are no surprises when the PR comes back with an issue. Also, hopefully you disclosed all required information on the PR application. If so, most likely in this case it will not be anything that would impact your clearance.

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Thank you sir for your help and response! We would like to buy a house soon, next year or two, and really just wanted to clear all this up asap to get back on track and get the house. Your input and response has helped a lot to ease my mind!

Also, I was unaware of having to report these things. This is my first government job and I’ve never had a security clearance before. I knew if anything involving law enforcement criminal wise or things like that happened I would have to notify but I was unaware of financial reporting. I will notify asap about it then, it wasn’t intentional.

I hope self reporting it now is still ok, honestly I don’t ever remember getting a security briefing on our clearance when I originally got one and I know we haven’t gotten a yearly one since, been more of other topics. Like I said I will report asap, my 86 hasn’t been sent in yet.

Shouldn’t be a problem as long as you disclosed all on the current SF86. If asked you can state the same you have here about why you didn’t report it earlier.

I did, I used the continuation space and all available statement areas to disclose and explain the steps taken to resolve them. I put in all account numbers, credit counselor info and organization, the payment plan info they were on, the communication I had with original creditors as well as organizations acting on their behalf, the ability to provide documentation, reasons why it happened in the first place, how I’ve changed things since and how I’m planning on the future. I thought some of it may have been a little lengthy but I didn’t want to leave out anything. I didn’t rush through the form either, took my time, documented and even added more than the required 3 references. Thank you for your help and guidance, it’s nice to get first hand info and guidance from experienced professionals like yourself.

Is there anything else I should do to be prepared?

Hello. I have an e-qip SF-86 due in a week for my re-investigation. I have recently received my credit reports and all past settled debt through collections is no longer on my reports as negative. All the previous accounts that are still on my credit reports are shown in good standing or paid as agreed. However, I do have letters of settlement agreements that are within the last 7 years (the latest being January 2014). Do these still need to be reported under the section that asks for- delinquent debt over 120 days within the last 7 years?

Thank you.

Yes. Report any reportable events that occurred, or fell into, the reporting period.

The question asks “in the last 7 years”. You need to report the information to demonstrate you are not hiding these reportable actions and in fact have taken care of them.

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ONLY if the debts were reported on the report as over 120 day delinquent. If they were 90 days late you are not required to report them.

Thank you for your responses. My credit reports no longer report any delinquency because they were paid as agreed. Is there another way to find out if they were 90 or 120 days delinquent?

If the reports do not report any late payments then you cant possibly know what to list. Just put a note in your application stating your not sure.

Sounds good. I’ll write up an explanation.

If an account went to collections in the last 7 years then it needs to be reported regardless of how many days late it was.