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It is important for all Americans to educate themselves about the credit scoring system, because good credit can lead to better interest rates on loans, lower insurance premiums, and improved employment prospects. For military veterans, this education is especially important.
Those on active duty may find it hard to keep up with things like loan and credit card payments, which can lead to damaged credit and other financial difficulties when returning to civilian life. Understanding how credit scoring works can help veterans prevent these consequences and take steps to achieve financial stability. Whether you’re going to enlist, you’re already on active duty, or you’re done serving, you can start learning about the military and your credit score here.
If possible, people should consider how they can maintain a decent credit score while they’re serving in the military. It may be difficult to keep finances in mind when preparing to serve, but you’ll see its impact on your financial situation when you return. Here are some important things to know about your credit before you enlist.
When you’re considering joining the military, you should first make sure your finances are in order. The background check process often includes a military credit check. They’ll look for any red flags that indicate financial problems. They may also check your debt-to-income ratio to see if you’re able to handle all your debts while serving.
While a low credit score alone won’t disqualify you from serving, it’s important to show you’re responsible and able to manage your finances. If you have concerns about your financial situation, talk to a recruiter or another military personnel before enlisting.
As safeguarding classified information is essential to national security, maintaining a high credit score is one way to show reliability. Good credit indicates financial responsibility and trustworthiness, and it’s a factor used to assess whether you can handle sensitive information. According to Veteran.com, “Financial issues consistently rank as the number one reason why people have their security clearances denied or revoked.”
If you’re seeking a position that requires a high security clearance, your credit will likely be checked as part of the screening. For this reason, it is important to keep your credit in good standing if you want to maintain or advance your security clearance. Many resources are available to help military members and veterans improve their credit scores. By taking advantage of these, you can ensure your credit score doesn’t hold you back from achieving your career goals.
In addition to preparing your credit before you enlist, you should keep these things in mind while serving.
The Servicemembers Civil Relief Act (SCRA) is a federal law that provides protections for active-duty military personnel. The SCRA allows service members to postpone or suspend certain financial obligations. These include mortgage payments, credit card bills, and tax payments. The SCRA also places a cap on interest rates for certain loans taken out by service members pre-service. (Note that you may have to say something explicitly to your lender to receive these benefits.) These provisions can help members of the military focus on their duties without worrying about finances.
The SCRA’s protections extend to veterans who have been honorably discharged within the past year. This is important because many veterans find themselves in difficult financial situations upon returning home. The SCRA can help veterans get back on their feet by giving them some breathing room with their debts.
The SCRA can help veterans improve their credit. By postponing debt payments and securing lower interest rates, veterans can work to make payments on time and in full—one of the major factors that determines a person’s credit score. As a result, the SCRA’s protections can have a major impact on a veteran’s financial well-being. We also recommend researching the Military Lending Act to learn more about your rights.
Your creditors can’t offer you slack unless they’re aware of your situation. That’s why it’s important to keep your creditors updated on your situation. Many provide additional benefits for military members—make use of them.
A good way to maintain good credit health while you’re serving is to use your bank’s autopay function to pay bills. As long as there’s money in your account, you won’t need to take any additional steps after setting up autopay for your debts.
Active-duty fraud alerts are free services that help you keep tabs on your credit. By signing up for active-duty fraud alerts, you’ll be notified if there’s suspicious activity on your account, so you can quickly take action to protect your credit if necessary. Additionally, many credit agencies offer free credit monitoring services. This service can help you stay on top of your credit by providing you with regular updates and alerts.
If you’re deployed or away from home, your power of attorney can handle things, including your financial affairs, in your absence. This includes paying bills on time, maintaining a budget, and monitoring your credit report. This is also true if you are injured or are otherwise unable to manage your finances alone.
Find out if your base has an onsite personal finance manager (PFM) who can help you. Your PFM should be able to provide you with one-on-one counseling as well as other resources that you can take advantage of to help you with your finances.
After you arrive home, it may be easier to manage your finances, including your credit. Here are some things you’ll want to consider doing.
It’s important to check your credit score and reports often to ensure the information they contain is accurate. You’re currently entitled to a free weekly credit report from the top three credit bureaus. You can get them all at once by visiting AnnualCreditReport.com. Reviewing your credit reports helps you catch and address errors and questionable items early, which can save you time and money down the road.
There are some things you can do to maintain good credit habits. First, always pay your bills on time. This includes credit card payments, student loans, car payments, and any other type of bill you might have. Second, try to keep your balances low on your credit cards; maxing out your cards can hurt your credit. Finally, only apply for credit when you need it to avoid having too many hard inquiries in a short period of time.
There are several financial benefits available to military members and their families. One way to take advantage of these benefits is to apply for military-specific loans. VA mortgage loans are available to eligible veterans and their spouses and can have some advantages, including low interest rates and no down payment requirements.
USAA car loans are another option available to military members and their families. These loans offer competitive rates and terms and can help finance the purchase of a new or used vehicle. NFCU also offers car loans specifically for military members and their families.
Unfortunately, many veterans often struggle to make ends meet. Besides the challenges of readjusting to civilian life, they often face financial problems due to low incomes and high levels of debt. Credit repair can be a helpful step for veterans who are trying to improve their financial situation.
Lexington Law offers a focus track for military service members, providing them with the resources and support they need to improve their credit. This can help veterans access better interest rates on loans and credit cards, rent apartments and even get jobs. With Lexington Law on their side, veterans can take control of their finances and start putting their lives back on track.
