Military families face unique challenges in building and maintaining a great credit score. Regular moves, job changes and irregular income for military spouses, and international deployments all have the potential to cause havoc in your personal finances. But military families also have benefits and access to unique accounts that offer an advantage over plain old civilians. Ready to find out more? Follow along to learn useful tips for military families to boost their credit.
Avoid bad debt
The first step to building or fixing your credit score is to avoid bad debt. Bad debt are debts that only cost you money in interest and give little in return. The biggest offenders are credit card debt and payday loans, both of which charge very high interest rates and don’t give you anything in return aside from what is essentially a short-term loan.
Many personal finance experts argue that all debt is bad, but some debt can be beneficial, like a mortgage to buy a home or student loans in pursuit of a degree with great job prospects. These types of loans charge lower interest rates and give you something in return. Further, these types of installment loans, when paid on time each month, can help increase your credit score over time. As long as you don’t miss payments or pay late, there is no shame in a mortgage and it can help your credit score.
Carrying any credit card balance, however, lowers your score. The best balance for your credit score is zero. Not only is credit card debt expensive, it lowers your credit score. If you can avoid credit card and payday loan debt from the start, you are setting yourself up for success.
Seek out military credit and loan benefits
There is a special regulation just for deployed military members that allows you to avoid all credit card annual fees while overseas. Many banks and card issuers offer additional benefits to military members and their families, particularly if the military member is called up for service and sent on a tour of duty outside the United States.