Having a low credit score can be extremely damaging. Some of the risks you face include not getting the clearances you need for certain jobs, paying high-interest rates, having your loan or credit card application denied, and receiving collections calls.
Service members should keep their wallets safe by following these three tips.
Get a better deal on your credit card debt
If you entered the military or were in the reserves before the Servicemembers Civil Relief Act of 2003 took effect, no one can charge you more than a 6.5% interest rate on the debt that was taken out before you joined the military or before you were deployed. Credit cards and most types of loans, including mortgages, are subject to this interest rate.
However, wouldn’t it be better if you could start saving money as soon as possible rather than wait 180 days after leaving active duty? Require your creditors and lenders to lower your interest rate as a result of the SCRA by notifying them in writing that you will be serving your country during this time. A copy of your military orders and a form of identification will be required.
If you have debt that was accrued before you were activated, the 6 percent limit does not apply to you any longer. The original annual percentage rate will be applied to any new charges made with a credit card. While military pay can be modest, getting a break on interest on existing debt can help you stretch your dollar further. This benefit is also available to spouses who are covered by the SCRA.
Set up an alert on your credit report for active duty
While serving, you are protected from identity theft by having an active-duty alert set up. If a creditor wants to make sure a credit application in your name is legitimate, they will have to go through additional verification steps.
Send a request for an alert to credit bureaus. The other two bureaus will be informed by this one. You’ll need proof of your identity and active-duty status before you can apply for a student visa. You have the option to extend the alert for an additional year. For the next two years, pre-approved credit offers will also be halted.
Checking your credit reports before joining the military is a good idea. Dispute any inaccuracies you find. Make certain that the phone number listed is correct as well.
When you must relocate, take a breather
Getting out of a lease and making a move can be very expensive. The SCRA can assist you if you’re relocating to fulfill military duty or enlistment.
You may also be able to get out of a lease or a cell phone contract early without incurring exorbitant fees or having debt collectors call you.