What Military Members Should Know About Credit

How Military Service Affects Your Credit

Many people know that bad credit can affect several areas of life — ability to obtain a loan, insurance, and employment. It is perhaps a lesser-known fact that bad credit can also be a factor in determining an individual’s eligibility to join the armed forces. Good credit is important for everybody, but it may be even more important for those who are serving our country. Military members should be aware of why good credit is important and should know how being in the military could affect their credit.

Bad Credit Could Impact Your Security Clearance

Some branches of the military run a credit check on anyone who wants to enlist — in other words, a credit check is part of the standard background check. Other branches only run credit checks on applicants who require a security clearance. Credit matters in determining whether to issue a security clearance because poor credit can be a sign that the applicant is irresponsible or untrustworthy. Moreover, credit issues can lead to poor job performance if an individual needs to work a second job in order to pay off bills.

Even if you manage to join the military with not-so-great credit, if the chance for a promotion comes along (which can require a higher clearance level), your security clearance could be up for review. In that case, if your credit has gone downhill, you could be denied the promotion or even have your security clearance revoked.

If you are considering joining the military, you should take a look at your credit reports if you have not already done so. You may determine that some degree of credit repair is necessary if you notice any questionable negative items on your reports.

Deployment Could Affect Your Credit

While the act of deploying does not in itself affect a military member’s credit, being deployed could impact your credit if certain precautions are not taken. Maintaining good credit while on deployment requires two things: making sure that your bills get paid on time while you are away, and establishing safeguards to prevent identity theft.

To ensure that your bills get paid on time and to prevent late payments or collections, contact your creditors and service providers to make them aware of your deployment status. You may want to consider appointing someone you trust as your power of attorney, to ensure that any problems can be timely dealt with in your absence.

It is also important to take measures to prevent identity theft, which could wreak havoc on your credit. It is a good idea to put an active duty alert on your credit reports to prevent anyone from opening accounts in your name while you are deployed. The alert will remain on your account for one year, unless you choose to end it sooner, and will require creditors to take extra measures to ensure that anyone applying for credit in your name is actually you.

Another measure to prevent possible identity theft involves opting out of junk mail. You should also make sure that your mail is being sent to a trustworthy address and that your mail won’t pile up for long periods of time before someone attends to it.

Taking these measures can help you leave for deployment without having to worry about your financial affairs and your credit. Instead, you can focus on your job and rest assured that when you return, your credit will still be intact.



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