Methods to Shield Your Credit score Whereas within the Army
Being deployed means you need to check a lot of things off your to-do list to ensure that nothing goes amiss while you are away. Due to the emotional and mental effects of this stage in your life, the last thing you want is to worry about your credit.
To save you from the headaches and worries, here are some tips on how to protect your credit while in the military:
Put an Active Duty Alert on All Credit Reports
Similar to a fraud alert, an active duty alert is a notice on all your credit reports that will encourage lenders to be extra wary before they approve credit under your name.
Creditors may sometimes be required to get in touch with you directly or verify your identity before credit approval. It will make it more difficult for people to apply for a credit card or loan under the pretense of being you.
An active duty alert will also remove you from credit card and insurance offers for two years max. It means that providers won’t be able to do soft pulls on your report and send a preapproved offer via mail. It lowers the risk of someone else taking this preapproved offer and opening credit under your name without your knowledge.
The good news is that you can use these active duty alerts for free and can also be requested from one of the three major credit bureaus. You can then ask the bureau to tell the other two to do just the same. These active duty alerts, however, only last for a year so you have to request them annually as needed or preferred.
Know Your Rights Under the Military Lending Act
Military Lending Act offers protections for all active military members seeking credit while in service. The act has several provisions including the following:
- Capping interest that includes finance fees and charges on loans up to 36% notwithstanding the credit score as well as other factors.
- Protection from prepay penalties when the loan is repaid early.
- Limiting the things that a creditor can require you to agree to like mandatory payments from paychecks and mandatory arbitration clauses.
Be Familiar with Your Rights Under Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act or SCRA provides protection for members of the military in terms of civil legal action such as matters related to finances. The following are some of the act’s offered protections:
- Default Judgment Protection
A default judgment in civil cases takes place if one person doesn’t attend a scheduled meeting. When default judgments are permitted, the judge will decide in favor of the attendee. Due to their occupation’s nature, military members may get protection from default judgments if they cannot attend a hearing because of their military service.
In certain instances, when a military member has a high interest debt before joining the service, they may reduce the interest rates to no more than 6%.
- Foreclosure and Repossession
Creditors must also get court orders in some cases to foreclose or repossess an active service member’s property. It often requires the military member to have taken out the property’s loan before enlistment or going into an active duty status.
By knowing how to protect your credit while in the military, you will be able to serve with better peace of mind.