Credit Bureaus Announce Free Credit Freezes for Military Members

Active-duty military members are given a number of financial protections, and the major credit reporting agencies just added one more perk to that list.

Active-duty military members are given a number of financial protections that average consumers aren’t privy to, and this week the major credit reporting agencies added one more perk to that list — free credit freezes.

The move was announced Wednesday in a release from the Consumer Data Industry Association, a trade group that represents the major credit reporting agencies. Experian, Equifax and TransUnion are all participating in offering free credit freezes for active-duty military, which is expected to roll out in the first half of 2018.

Freezes are a tool used for identity theft victims to stop their credit from being used without their permission. It essentially blocks anyone from opening new lines of credit using the consumer’s identity, unless the consumer has the freeze temporarily lifted or removed.

“Given the nature of the military lifestyle, with frequent location moves and overseas deployments, these brave men and women, and their families, may find it particularly challenging to address an identity theft situation,” said Eric J. Ellman, Interim President and CEO of CDIA.

Placing, lifting or removing a security freeze can cost up to $10 each time, depending on the state you live in and the bureau offering it. Active-duty military members already can place a one-year credit alert on their file for free, though this will not stop a new application for credit by default like a freeze would. The alert just requires the lender or creditor to take extra measures to ensure the applicant is legitimate.

Identity theft can do major credit score damage both upfront and in the long term. An identity thief with enough information to apply for credit in your name can make a bunch of applications for credit in a short period of time before you notice the theft. That will cause an immediate drop in your score by inflating your inquiries. And if the theft goes unnoticed, any new accounts that they’ve opened will go without payment, sinking your score even more.

The move by the bureaus to offer free credit freezes is especially important when you consider the long-lasting impact of identity theft on military members and veterans. Buying a home, getting credit cards, even starting a business (9% of U.S. businesses are veteran-owned, according to the Small Business Administration) are extremely difficult to do with a bad credit score, and identity thieves with personal information like your Social Security number can lie in wait for years since these numbers rarely change, hurting servicemembers long after the theft has occurred.

The best protection against identity theft is vigilance. Keep an eye on your credit reports and scores, checking for signs of identity theft. (You can see two of your credit scores for free right here on Credit.com.) Keep your personal identifying information on lockdown. And if you still find your information being used fraudulently, credit alerts or freezes can help keep you safe.

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How to Maintain Good Credit While Serving in the Military

Budgeting during deployment or transfer to a new assignment might be on the mind of many military service members. What might not be are credit scores and how they could impact the costs for everything from a credit card’s annual percentage rate, or APR, to a new mortgage.

Here are four tips for how to maintain good credit while serving in the military.

1. Save When You Can

Whether you’re on active duty, in the reserves or are returning from tour, keeping a savings account may help you avoid going into debt now or down the road in an emergency. (Consider these five mistakes to avoid when you start saving.) 

“The best advice is to make savings a priority while avoiding unnecessary spending,” Bruce McClary, the vice president of communications for the National Foundation for Credit Counseling, said in an email. “Adequate savings will help avoid financial emergencies that would otherwise lead to unmanageable debt. Savings also helps during periods of transition from military to civilian life.” 

While you’re serving can be a good time to save, as some of your expenses may be covered by the military. This can help you save for emergencies or hefty future expenses, like raising a family or buying a home. (Though some veterans can qualify for 0% down VA home loans.)

2. Communicate With Those Back Home

If you are sharing an account with someone at home, it’s a good idea to discuss payment plans and spending before you leave so everyone’s on the same page. But the communication shouldn’t end there.

“Staying in touch with joint account users, such as spouses, can help avoid any surprises while keeping accounts paid as agreed,” McClary said. “At the same time, you should use all means available to monitor account activity online whenever possible.”

3. Use Online Resources to Your Advantage

Depending where you are deployed, you may or may not have frequent internet access. However, if you do, there are several online tools to help you maintain good financial habits while serving in the military, like online banking and budgeting tools.

“Those serving on active duty can set alerts that help them keep a closer eye on how an account is being used, giving them instant access to charges and balances,” McClary said. “Payment due date reminders can also be helpful, along with automatic payments.”

Having a late payment can subject you to late fees, and missing one altogether can potentially harm your credit score. So even if you have automatic payments set up, it’s a good idea to monitor those and ensure they go through as scheduled.

“If automated payments have been arranged, set a schedule where you can check to see if they were processed correctly,” McClary said.

If you don’t have internet access while overseas, consider having a trusted family member check your accounts to make sure any automatic payments are processed correctly and on time.

4. Keep an Eye on Your Credit

“Credit reports should also be monitored on a regular basis,” McClary said. If you have internet access, you can get your free credit reports once a year on AnnualCreditReport.com, and you can view your free credit report summary, updated each month, on Credit.com. Should you find any inaccurate information, you can dispute the errors on your credit reports with the credit reporting agency or agencies that have it wrong.

Members of the military who are deployed can also consider placing an active duty alert on their credit reports.

“An active duty alert remains on the report for one year,” Rod Griffin, Experian’s director of public education, said in an email. While the alert only lasts a year, it can be renewed. “It notifies creditors that you are a member of the U.S. military and that you are currently on active duty,” he said. “An active duty alert does not require a lender to contact you directly to get your approval before granting credit in your name, but it does enable them to take appropriate action to protect your identity.”

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