Avoid the Credit Trap: Why Protecting Your Credit Score Is Crucial for Veterans

Avoid the Credit Trap: Why Protecting Your Credit Score Is Crucial for Veterans

June 15, 2023

A solid credit score is a must for everyone. However, protecting your credit score is especially crucial for veterans. Your credit score is one of the criteria for determining whether or not you will be approved for a VA loan. Interestingly, the VA does not ask for a specific credit score to obtain a VA loan; a certain score threshold may be required by specific banks.

Building a credit history is crucial to secure any type of credit or loan. Having a good, high credit score opens doors for you financially that otherwise would not be available to you. Using credit wisely is the first step toward building a strong credit score. Let’s discuss some practical ways to improve (and maintain) your credit score.

Take Advantage of Free Credit Score Monitoring

Equifax, Eperian, and TransUnion all offer active duty military and National Guard members free credit monitoring. This benefit allows you to keep on top of your credit score since it is a fluid, ever-changing ranking. When you see your credit score slipping, you can take immediate action to help raise it again. Or, if your score is in the range of good to excellent, you’ll know you’re making the right choices and handling your credit, debt, and loans in a responsible way.

Get Your Credit Reports Regularly

A good financial practice is to regularly get a copy of your own credit report. This report has an overall score plus detailed information about all your open and closed credit cards and loans and how timely you made payments. Receiving your credit report is the best way to monitor for any mistakes that may be present. When you see an error in your report, you can work to correct it. We suggest getting your own credit report on a regular basis, perhaps every quarter or at least every year. If you’re requesting your report online, make sure you’re using a safe and secure device and internet connection since you’ll be providing personal information such as your Social Security number and date of birth. 

Take Steps to Improve Your Credit Score

Be ever on the lookout for ways to up your credit score. Once you start reviewing your report on a regular basis, you’ll notice times when your score dorps a bit and times when it increases. As stated earlier, be sure to dispute any discovered errors. Errors may be present in the spelling of your name, your address, or your Social Security number. 

Here are some ways to improve your credit score:

  • Pay all your bills on time.
  • Use only 30% of your available credit.
  • Do not open any new accounts.
  • Keep old accounts open even if you’re not actively using them.
  • If you have debt from before you were on active duty, you can request an interest rate reduction to 6% under the Servicemembers Civil Relief Act.
  • Go to your military branch Relief Society if you’re holding debts you can’t pay.
  • Pay off any tax liens or judgments.

Attaining a high credit score is like a science. These strategies can actually work in your favor, so as you implement them, you should see your credit score improve over time. 

Protect Your Credit

Protecting your credit score is just as important as improving a lower credit score. In this age of cyber theft and identity theft, taking measures to safeguard your identity and your credit history is paramount. You can set up an initial fraud alert on your credit history. This requires any creditors or businesses to verify your identity before opening an account in your name, issuing a new card, or increasing your credit limit. The cost is free and is active for one year. Similarly, you can put in place an active military duty alert on your credit whenever you are in active duty. The same benefits apply as with the initial fraud alert. 

If you ever think you have been a victim of identity theft, you can place an actual credit freeze on your identity. This hold forbids the opening of new accounts and prevents access to your credit reports by anyone. This level of alert is also free and stays in place until you call the three credit reporting services and have it lifted. 

We Can Help

Your credit history is the history book of your credit life. Having a good, solid credit score opens the door to opportunities such as buying a home, applying for a VA loan, renting an apartment, or opening new credit cards. It’s personal to you and you have a good deal of control over it. 

Following the steps outlined in this article can help keep your credit score as good as it can be. But, as always, remember that you don’t have to navigate financial matters alone. If you need help managing debt, budget creation, or financial planning, the Favor Wealth team is here to help. Contact us at 626-529-0445 or email Ricky directly at info@favorwealth.com.

About Ricky

Ricky Biel is founder, wealth manager and Chartered Retirement Planning Counselor  ̈ professional at Favor Wealth, an independent financial advisory firm serving individuals and families near Pasadena, California. Ricky Biel founded Favor Wealth with a desire to provide unbiased, client-centered, community-based financial advice. Ricky and his team of caring, smart professionals want their clients to feel like they’ve done them a favor, making it easier than ever to accomplish their financial goals by blending proven investment methodologies with creative financial technologies. He is on a mission to help his family of clients feel both a sense of relief and excitement about their future. Favor Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the Favor Wealth team may be able to help, contact them today at 626-529-0445 or email Ricky directly at info@favorwealth.com

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