Compulsive individuals have deficits in model-based planning, but the mechanisms that drive this have not been established. We examined two candidates-that compulsivity is linked to (1) an impaired model of the task environment and/or (2) an inability to engage cognitive control when making choices. To test this, 192 participants performed a two-step reinforcement learning task with concurrent EEG recordings, and we related the neural and behavioral data to their scores on a self-reported transdiagnostic dimension of compulsivity. To examine subjects’ internal model of the task, we used established behavioral and neural responses to unexpected events [reaction time (RT) slowing, P300 wave, and parietal-occipital alpha band power] measured when an unexpected transition occurred. To assess cognitive control, we probed theta power at the time of initial choice. As expected, model-based planning was linked to greater behavioral (RT) and neural (alpha power, but not P300) sensitivity to rare transitions. Critically, the sensitivities of both RT and alpha to task structure were weaker in those high in compulsivity. This RT-compulsivity effect was tested and replicated in an independent pre-existing dataset (N = 1413). We also found that mid-frontal theta power at the time of choice was reduced in highly compulsive individuals though its relation to model-based planning was less pronounced. These data suggest that model-based planning deficits in compulsive individuals may arise, at least in part, from having an impaired representation of the environment, specifically how actions lead to future states.