Association of Military Banks of America

Pillars of Personal Financial Success – Tips for Everyone to Maintain or Build Good Credit

part 1 of an 8-part series

AMBA recently wrote a blog about the importance of knowing your credit score and knowing what information is in your credit report.  This blog also referred to credit as a whole and how it affects the cost of good credit versus not so good credit when applying for loans and utilizing credit.

The all-so-familiar slogan “cash is king” may not be the best phrase to live by.  Not only can it be difficult to live in a world without credit, but it can also be problematic to not maintain any credit.  The concept of sustaining and using credit wisely is the best option.  The “credit conversation” is important to everyone.  Most likely as a reader of this blog you will fit into one of three categories.  A. You have credit, and use it wisely.  B. You have credit, and are in over your head in debt.  C. You don’t have any credit, or very little, but realize that you will need to use credit and build your credit. There are of course gray areas in each category but for the sake of this blog, we will assume you fit into one of these categories.

A.     You have credit and use it wisely.  You may still find help from the content of this blog, by keeping in mind that it is always important to “shop” for your financial products, as you would with a consumer product.  Your current financial institution may not offer the best rates for savings accounts, CD’s, or loan rates.  Shop around and find your best rates.  Remember to check with your on-installation military bank for special offers throughout the year, especially during Military Saves Week.

B.     You have credit, and are in over your head in debt (maybe seriously in trouble).  You may need immediate help.  Just know, there are places to turn for assistance.  First, you can check with one of the Military Aid Societies associated with your service branch, Army Emergency Relief, Air Force Aid Society, and Navy-Marine Corps Relief Society.  You can also check with your military bank.  There may be specific products and services they can offer to help you get the assistance you need.  The most important thing is to seek out help.  You are not alone.  Financial counselors are fantastic resources!  See the next section for more information on financial counselors.  These professionals can really help you get back on track, develop a debt repayment plan, and set up an emergency savings plan to improve your financial readiness.

C.     You don’t have any credit, or little credit and need to build credit.  Navigating the credit world can be daunting.  It will be helpful to have a trusted source to help you find your way.  A financial counselor is a great resource to ensure you are making good decisions.  Whether you are building credit, paying off high credit, or taking on new credit (like a car or a home) it can be very helpful to see a financial counselor first.  You can visit a financial counselor at your military bank, in your Family Readiness Center on your installation, or through Military OneSource.

As you build credit you can start with a secured credit card.  A secured credit card is a great step toward showing you can use credit responsibly.  In the simplest terms, your credit worthiness, or how responsible you are with credit, is the whole point of your credit score.  To apply for a secured credit card, check with your financial institution.  The best place to start to build credit is with a bank you already have a relationship with.

Remember, not all credit needs to begin with a credit card, but a secured card can be a great place to start.  Having installment credit (like a home or a vehicle) can also help you increase your credit worthiness.  There are many factors that make up your credit score and credit history.

Learn about the difference between credit score and credit report

Building and maintaining credit can be challenging.  For some, excellent credit seems easy, but trust me, most people have had speed bumps on the road to financial success.  The best thing you can do it start building credit responsibly and/or gain control of your debt situation today!

Stay tuned for the next blog in our series: Pillars of Personal Financial Success: Achieve Financial Stability

Consumer Financial Protection Bureau – Office of Servicemembers Affairs – Related article: Good Credit, I Want That! by Holly Petaeus

By: Andia Dinesen, AFC®
VP Communications and Operations
Association of Military Banks of America (AMBA)