Around a third of active military service members in 2019 said they didn’t pay all their bills on time, and close to that number of military spouses said the same. Military service can require some serious financial planning. But many service members might not realize how joining the military impacts their creditâand how their credit can impact their military career.
Find out more about the
relationship between a military career and credit below. Plus, get some
information about resources that can help military members protect their
No matter which branch of the
military you want to join, you have to meet certain eligibility requirements.
Specific requirements vary by service branch as well as the level of security
needed for the job.
The military does conduct background checks to determine factors such as whether you have a criminal background. A credit check is often included by some branches because the state of your financial situation can help provide a picture about your overall reliability. And if you’re dealing with a great deal of debt or have negative items on your credit report, it could make you vulnerable. Someone in financial distress could be at greater risk of illegal or questionable activity to generate money.
You can be denied military enlistment if you’re in financial trouble, such as if you have a number of collections in your credit history. But it’s actually more likely that poor credit will impact your ability to move up within a military career. That’s because Guideline F of the National Security Adjudicative Guidelines outlines financial considerations that may disqualify you from various levels of security clearance.
Failing to meet those requirements could result in revocation of security clearance. And that could mean losing your job with the military. Any time enlistment depends on a security clearance, the same could be true for simply joining up.
Joining the military doesn’t
have a direct impact on your credit. You won’t get points on your score because
you’re a service member, for example. However, you might want to pay attention
to your credit because you could be subject to greater financial monitoring
depending on your position and security clearance.
Being in the military can also create some challenges that relate to credit. The National Foundation for Credit Counseling notes some common financial trends and challenges experienced by military members and their families, including:
That doesn’t mean it’s
impossible to maintain a strong credit score while you serve in the military.
In fact, a number of resources are available to help you do just that. Here are
just a few tips for protecting your credit while you’re in the military,
particularly when you’re deployed.
An active duty alert is like a fraud alert. It’s a notice on your credit reports that encourages lenders to take extra precautions when approving credit in your name. In some cases, creditors may be required to contact you directly or otherwise verify your identity when approving credit. This makes it harder for someone to pretend to be you and apply for a loan or credit card.
Active duty alerts also remove you from insurance and credit card offers for up to two years. That means that providers can’t do a soft pull on your credit report and send you a preapproved offer in the mail. This reduces the potential for someone to take that preapproved offer and open credit in your name without you knowing about it.
Active duty alerts are free.
You can request one from any of the three major credit bureaus and ask that it
let the other two know to do the same. Active duty alerts last for one year, so
you’ll need to request them annually if desired.
The SCRA offers some protection for military members when it comes to civil legal action, including those related to financial matters. Some of the protections under this act include:
The Military Lending Act provides a number of protections for active military members who are seeking credit during their service. Some provisions of the act include:
questions about your individual circumstance regarding FCRA or the MLA contact
your military branchâs legal office for guidance.
As a current or former
military service member, you may also have access to perks that help you build
and manage your credit and personal finances. Here are just a few.
NOTE: The CARES Act specifically provides some protections to military personnel and veterans during the COVID-19 coronavirus pandemic. This includes protections for VA-guaranteed loans for those experiencing financial hardships.
Understanding your rights and
what resources you have availableâas well as taking proactive approachesâcan
help protect your credit while you’re in the military. But no plan is
foolproof, and mistakes can happen. So, it’s important to check your credit
reports whenever you return from deployment and regularly even when you’re not
If you find anything on your credit that isn’t correct, you have a right to challenge it. DIY credit disputing is possible, but it takes more time than active duty military members might have. Consider working with a credit repair firm such as Lexington Law, which has tools to focus verification and challenges for military personnel. Working to challenge inaccurate negative items can help you protect your credit so you can protect your security clearance and your financial future as well.
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Disclosure:Â Credit.com is owned by Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.
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