Having good credit means it’s more likely you can borrow money at good rates, and have fewer problems with getting your security clearance, job, apartment, and insurance. People with bad credit or no credit often have serious problems with those things — but you can always improve your credit with time and effort. Get help from your PFM or a reputable non-profit credit counselor.
No credit history? Here’s how to build one.
- Pay bills that are included in credit reports, like car and credit card payments — and pay them when they’re due. If you don’t pay on time, it can hurt your credit.
- Consider getting a secured credit card. These cards let you deposit money on the card up front and then spend it down. Use your card a few times a month to buy things you’d buy anyway, like groceries or gas. Many credit unions, banks, and other companies offer secured credit cards and report how you pay for your card. Look for a card:
- with no or low fees
- that lets you earn interest on the money you deposit
- that reports to the three credit bureaus
- While you’re on active duty, federal law limits the interest rate to 6% — but only on credit incurred before you entered the military, including credit card debt. You must notify the creditor in writing of your active duty and include a copy of your military orders or a letter from your CO stating the date of your active duty. Interest above that is permanently forgiven and can’t become due once you leave active duty.
Credit history not so good? It takes time, but you can improve it.
- Pay down your credit cards first. Make a plan to pay the card with the highest rate first.
- Don’t get any new credit cards. Having a lot of new credit hurts your credit score.
- Keep your older credit card accounts open, even if you don’t use them. Having credit for a long time helps your credit score.
- Remember that credit repair companies can’t remove accurate, timely, negative information from your credit reports. They also can’t charge you before they help you. And anything they can do for you legally, you can do for yourself. Only time and a plan to repay debt will fix your credit.
- Don’t pay others upfront if you’re looking for ways to pay off your credit cards more quickly or get a lower interest rate. It’s illegal for a debt relief company to charge you a fee before they do anything to relieve your debt.
Before you’re deployed, take these steps to keep your credit up.
- Make a plan. Meet with your PFM to plan your finances for your deployment. Set up automatic bill pay programs and be sure you understand the terms in advance. If you plan to use credit cards overseas, do some research before you go. Search “widely accepted credit card” and the name of the country to find out whether businesses there are likely to accept your card. And see if there are any additional fees for using your card overseas.
- Monitor your accounts. Set up an active duty alert to help protect your accounts. Sign up for free credit monitoring for active duty servicemembers from, Equifax, Experian, and TransUnion. Give someone you trust — your spouse or parent — access to your credit accounts.
