"Credit scores are important," said Denise Jones, Money Management Coach at Harborstone Credit Union.

For military and DoD civilian personnel, that is especially true because security clearances often determine jobs, and bad credit can impact that employment.

These have been challenging times in many ways for individuals and families. Many are facing financial hardship because of lost wages or changes in their living situations. If you're having trouble paying your bills, you may have the added stress of worrying about your security status.

A history of financial problems is a common reason to deny or revoke a person's security clearance. Jones said late payments can drop your credit score "tremendously." 

Jones also said that making minimum payments by the due date is the least you can do. While not ideal, it at least keeps your credit score from tanking.

Using your full available funds also affects your score. "It is best to use 30% or less of your available borrowing amount to keep your score higher," Jones added. Higher use of your available credit can indicate that you are a risky borrower, so keeping that ratio low is ideal.

Finally, Jones said it is better to keep two credit cards with small balances than one with a larger balance. This way, you use a lower percentage of each credit card limit, which can impact your score.

Knowing how credit scores are determined is key.

The Department of Defense Consolidation Adjudications Facility weighs a number of factors when evaluating a person's eligibility to access classified information. Among these is a person's financial history. Without background information, CAF may regard financial problems as an indication of poor self-control, a lack of judgment, or a disregard for rules and regulations. All of these raise a person's security risk.

Financial red flags include unexplained wealth, excessive gambling, and illegal activity, such as embezzling or expense account fraud. CAF will also look for:

• Unpaid debts resulting in collections

• Liens

• Failure to file state or federal taxes
• Living beyond one's own means

CAF will look at the circumstances surrounding these issues to determine whether they are true indicators of security risk. And while it will consider COVID-19 a mitigating factor, it will not automatically excuse bad debt or other financial issues that predate the pandemic.

Steps to Improve Financial Health and Protect Clearances

It's important to be upfront about any financial difficulties you're facing, even if they are a direct result of the pandemic. CAF will look for evidence that you have acted responsibly and taken steps to resolve the problem.

If you have fallen behind on your bills, do the following as soon as possible:

• Inform your security management office of your financial hardships.
• Contact your creditors and come up with a plan to repay your debts.
• Document all information.
• Maintain open and honest communication with your supervisors.

In reviewing your situation, CAF will look at whether you:

• Reported the information voluntarily
• Responded truthfully and completely to questions
• Sought assistance and followed professional guidance where appropriate
• Resolved or are likely to resolve the security concern
• Demonstrated positive changes in behavior

CAF may request more information while reviewing your status. It will grant 30-day extensions for your response during the pandemic. Responses must be received within 30 days after the pandemic ends.

Other Reasons to Watch Credit Scores

Credit ratings also affect how much interest you will pay on purchases such as cars or furniture, as well as credit card rates, Jones said.

Taking control of your finances doesn't mean going it alone. Help is available through places like Harborstone. Once known as McChord Credit Union, Harborstone has a team of experts to help members assess their financial situations and make a plan to get things back on track. Being proactive, especially when it comes to your security clearance, is incredibly important.

"And you don't have to do it alone," Jones added.

To talk to Jones and her team, call 1-800-523-3641 or (253) 584-2260.

-      Military OneSource contributed to this report. Sponsored