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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Image: Mie Ahmt

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