By Amy Miller, AFC®
March is National Credit Education Month. Many service members and their families don’t realize how credit and finances can affect a military career. Here are some ways in which credit and finances can influence active-duty service and some tips on how to protect yourself.
Credit in the Military
Military members are held to a higher standard than their civilian counterparts when it comes to credit and finances. Department of Defense and Military Service policy requires military members to pay their debts and stay in good financial standing. Financial problems and poor credit are looked at as direct reflections of a service member’s ability to perform his or her duties without restrictions – duties that could impact overall readiness. Therefore, a service member’s financial behaviors, debt, and credit can not only affect their buying power, but they can also have an impact on their promotability, and security clearance, and could result in punishment or involuntary separation if mishandled.
When it comes to credit while in the military, it’s important for service members to understand how credit works and to maintain healthy credit reports and scores.
Tips for Maintaining a Healthy Credit Score
Although military life can financially challenging, it is important to maintain a healthy credit report and score while serving. Here are a few steps that service members can take to maintain and protect their credit report while in the military.
- Check your credit reports regularly and, at the very least, whenever leaving for and returning from deployment. You can get 1 free report per year from each of the three credit reporting agencies via www.annualcreditreport.com. (Currently, due to the COVID-19 pandemic, every American is able to request these credit reports weekly – this could end soon, though, so you may want to take advantage now!) Knowing what is on your credit reports is the best place to start. It’s important to check all 3 reports – not all lenders report to each of them so they may have different information. Ensure all credit reporting agencies are reporting correctly and request corrections or dispute items if needed. Pay any overdue accounts, collections, or charge-offs as well.
- Place an active-duty alert on your credit file. Placing this alert on your credit file helps to protect against fraud and identity theft. Like a fraud alert, this makes it more difficult for someone to open unauthorized accounts in a service member’s name by alerting the lender to his or her military status. This alert should prompt the lender to take additional steps to verify the applicant’s identity. You can place an active-duty alert on each of your credit files by visiting the three credit reporting agencies’ websites: Equifax, Experian, and TransUnion.
- Know your rights under the SCRA (Service Members Civil Relief Act) & the Military Lending Act. These laws offer financial protections for military members such as rate caps, and protections related to defaults, repossessions, and foreclosures while on active duty.
- Seek assistance, if needed. Service members can receive free financial counseling on military installations through their family readiness offices or virtually via Military OneSource. AMBA has partnered with the VA to create the VBBP (Veterans Benefit Banking Program). The VBBP offers Veterans or VA Beneficiaries one free financial or credit counseling session with certified credit counselors from the National Foundation for Credit Counseling or Accredited Financial Counselors® from the Association for Financial Counseling and Planning Education®.
Being prepared and knowing your rights and what resources are available can help you maintain a healthy credit report. These simple steps can help get you on track to a more secure financial future.