How Military Members Can Improve Credit Score After Service

Many Americans currently may be aware of the general importance that their credit scores have in their everyday lives, and this is particularly true for people who might have spent several months or more without routinely maintaining their standing in general, such as military members who were on active duty. Consequently, when a tour ends, those servicemembers may want to take the time to assess their standing and improve it as much as they can.

There are a lot of considerations to keep in mind which might have changed for a military member who didn't tap their credit often — or at all — while they were serving. This is particularly true if they have any accounts held jointly with a spouse or other loved one, which might have been used while they were away. Unfortunately for them, the decisions the other party listed on the account made in handling it will also reflect on them regardless of their role in the moves.

Of course, if the other person handled the account well, making all payments on time and in full and generally keeping their balances down, then there's likely little to worry about. But for those who might have encountered difficult financial situations, there may be some work to do.

Where to begin when trying to repair credit
The two most common credit mistakes people tend to make in their everyday lives are unfortunately also the two that will impact a rating most heavily, and therefore those who think their standing needs a little bit of work will know exactly how to begin dealing with any damage they might have incurred while on active duty.

The single biggest factor in determining a person's credit rating is their past ability to make all payments on time and in full, and it accounts for a full 35 percent of that rating. As such, any single missed deadline, regardless of whether it was by a single day or an entire month, will have the same massive negative impact on a person's otherwise good credit score, and unfortunately there is only one way for those who have made such a misstep to remediate the issue, and that's making a series of regular, on-time payments into every one of their accounts for a period of several months or more. While doing so will not erase the mistake they made previously, it will allow them to reduce its damage significantly. This in conjunction with the help of a credit repair law firm to help correct any damage to your credit report may slowly return their score back to where it was prior to the missed payment

Another major issue is that many borrowers might simply be carrying more debt than they should be on their credit cards, and that factor makes up an additional 30 percent of their rating. How much debt is "too much" is determined by what is know as a person's credit utilization ratio, which essentially means how much they're borrowing at any given time versus their total overall credit limits across all accounts. Lenders generally like to see borrowers keep the percentage of credit being used stay at or below 30 percent, and any more than that will start to eat into this portion of their score, which is, again, considerable. But that means that borrowers who are above 30 percent of their total limits have some work to do to return this portion of their score to being maxed out, and that includes taking the time to not only scale back spending on their accounts, but also making larger payments with regularity so that their loan principal is reduced to the more manageable, preferable level.

What else can impact scores
There are other factors that can impact a person's credit rating as well, but most are things that might not affect active servicemembers. Issues like credit mix (which makes up 10 percent of a score) and average length of account history (15 percent) are important to keep in mind going forward but likely won't need addressing after coming off active duty.

However, one thing these servicemembers might want to avoid is applying for new accounts soon after returning home but before repairing other issues related to their credit. The number of inquiries a person makes for new cards or loans in a short period of time makes up the final 10 percent of a score, and those who have not made steps to fix whatever mistakes may be dragging down their ratings will be more likely to be rejected. Thus, repairing credit before applying for more is of the utmost importance when it comes to maintaining a good credit score in general.

Finally, servicemembers should also take the time to order copies of their credit reports, and then check them over closely for any unfair markings which may be marring their otherwise strong ratings. If any are discovered, it can be wise to work with a credit repair law firm, which may be able to fix the problem.