Credit card charge-off

[mb1685]

I'm a college senior and I will be applying to OCS (SNA and SNFO) as soon as possible.

Long story shortened:

Three years ago, I decided to transfer to a different university in a much larger city. The entry-level job market was (and is) ridiculously saturated and the cost of living was much higher than I anticipated. After a few months of working a crappy job and realizing I needed help getting over some hurdles, I took out a credit card with Wells Fargo. Big mistake.

For 2 and a half years, I was able to get by and just barely stay on top of my bills and make my card payments. Of course, I switched jobs a few times and was always seeking something better. I tried my best to live within my means, and I was able to get by.

Six months ago, I got hit with a wave of financial troubles and I really had to prioritize my spending. Unfortunately, my credit card was towards the bottom of the list, after things such as rent and utilities, my car payment, and food. I was seriously having to go days without eating sometimes and it was impossible for me to make any payments on the card. I know it was stupid, and I knew it was then too...but I really had no other option. It was either rack up more credit card debt or get evicted.

I now finally have lucked out and obtained a really good job; one with which I can finally live pretty comfortably. However, I'm just barely too late. Wells Fargo declared a charge-off last month (I looked at my credit report and verified that it's on there) and closed the account. The balance is $1,034.

I have spoken with them and will be paying the full-amount so that it is reported as a paid charge-off.

I know that this is a horrible thing for my credit report and also a very negative factor in eligibility for security clearance.

Have I totally jeopardized my shot at being a naval aviator or is this something that can be looked past with a legitimate explanation? I will disclose all of the details of my situation, of course (including pay stubs and tax records, if needed). I know that credit is one of the most important things that is looked at for determining security clearance worthiness, but it was truly a matter of unforeseeable circumstances. My credit is in good standing otherwise. Are my chances compromised?

 

[jeremyjones44]

As long as you have a payment plan in place or have paid off the debt you will be fine.

 

[helolumpy]

I know that credit is one of the most important things that is looked at for determining security clearance worthiness, but it was truly a matter of unforeseeable circumstances. My credit is in good standing otherwise. Are my chances compromised?

For your security clearance the big thing the investigators are looking at are WRT credit:
1) Are you living within your declared means. Does it appear that you have income from "off the book" sources? If so, that could be a red flag.
2) Are you so in debt that you could be subject to compromise by persons not in the best interest of the Navy or the United States.
3) Are you habitiually a bad credit user. This shows lack of personal responsbility.

Your story reads like someone who got in a bit over his head and is working on it.
I'm not saying that it's nothing, but be up front about it. Write it up as a letter to the board and request your recruiter put it in with your package. Try not to leave anything up to the interpretation of the board. Explain your situation.

Finally, other than finishing paying it off, there is nothing you can do at this point. You can't change the past, all you can do it try to keep your credit record as strong as possible to show that this was an aborration and not a recurring issue.

 

[Renegade One]

What helolumpy said. This will make a cute story 30 years from now when you're the CNO speaking at some Dining Out or Navy Birthday Ball...at which time I, for one, hope to hell you're wearing NFO wings. PRESS!

 

[mb1685]

Thanks for the replies! I appreciate the words of encouragement, Renegade One.

I will definitely provide all of the information about my situation. It's good to hear that it may not be a dealbreaker. Now onto tackling the big hurdles; finishing school strongly, staying active within my school and community, and acing the ASTB!

 

[Seafort]

I had about $25K charged off. I worked hard to settle with my creditors, and while my credit still sucks, and will suck until April of 2013, I was told that nothing on my credit report marked me as a bad risk, because the debts been pretty much all gone since 2008. It all depends on whether or not you grew from the experience. I still have below average credit. It takes seven years, and I am almost there, I finally managed to get a credit card, which I have a perfect payment record with, and I've had substantial income and savings for the last five years.

It's understood that you will make mistakes, as long as you don't make the same mistakes. While I was rejected once for OCS, and have had multiple boards canceled on me (and hey, I still haven't given up), I was assured that my credit history was not the reason. I just finished my MA with a 3.75, so it's time to try again. Never give up, never surrender... The only surefire way to not get accepted is to stop trying!