Building Credit While in the Military

Summary: Most people who just join the military are in an enviable

Most people who just join the military are in an enviable position of having very little or no established credit. While this may seem like a bad thing, it actually puts you in a great position to build good credit. It is much easier to build good credit then it is to repair it so now is the time to thoughtfully establish some and maintain it to improve your credit rating. The military offers its service people an advantage. Lenders like the fact that you will have a guaranteed paycheck for four years and are more apt to extend credit for the first time. The first thing you should do is receive a copy of your credit report. There are three primary credit bureaus, Experian, Trans Union and Equifax that supply credit reports. It is advisable to get a credit report from all three. You will then need to analyze your report to see if it is accurate and what it says. If there are items on there that you are unaware of, now is the time to clear it up. With identity theft so prevalent today, even though you may not have credit, someone else may have gotten something in your name. Then, you will need to open a bank account. Navy Federal Credit Union (http://www.navymoney.com), NFCU is a good place to start for United States Navy service members. It is advisable to open both a checking and savings account. This will show stability and allow you to pay bills and function much easier. Deposit your paycheck into your checking account and take a portion every pay period to put into your savings account. Do not touch the money in your savings account. Instead, let it grow and accumulate interest. Keep an eye on your checking account and do not let the balance get too low. Always balance it and make sure you do not bounce any checks. You will want to apply for a revolving charge account. Types of credit that are good to get in the beginning are major credit cards like MasterCard, Visa or Discover. These will allow a lower interest rate and will help start you on a history of good payments. The trick is to not charge more than you can afford to pay off completely. Use the card for small purchases and pay the majority off each month. However, do not always pay it off entirely. You want to establish a good credit rating so be sure you do not pay late. Not only will it increase your interest rate and add finance charges but you will reduce your credit score. Establishing good credit takes discipline, something you should be familiar with in the military. Taking the time to build it now will hold you in good stead throughout the years and will enable you to get bigger loans when you need it. Eventually you will need a car and a home. If you have good credit you will be able to get approved for a loan more easily and get lower interest rates.