5 Quick Tips for Credit Awareness Month

October is Credit Awareness Month, and it’s the perfect time to take stock of your own personal financial situation. Before you shop on Black Friday or Cyber Monday, it is a good idea to assess your financial health and see whether your spending plan is still on track to get you to your savings goals.

Active Duty Military Will Soon Get Free Electronic Credit Monitoring

Starting October 31, active duty military and National Guard and Reserve members will be eligible for free credit monitoring from all three credit bureaus. Originally limited to those “away from their usual duty stations,” the bureaus have agreed it now applies to all active duty. Implementation details have yet to be announced.

Credit monitoring can only get you so far, however, which leads me to my next point.

Sure You Know Your Score, but Have You Read Your Report?

Now that many credit cards and banks give free credit scores, you may be aware of your “number.” However, just tracking your score as it rises and falls is not enough.

Simply concentrating on the number alone may not show past missed payments, errors, or lines of credit that may have been fraudulently opened.

You should be pulling your credit report at least once each year. The Fair Credit Reporting Act requires each of the nationwide credit reporting bureaus — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. You can, in effect, see your report three times per year.

Just make sure you are going to the official site, annualcreditreport.com, to pull your report. And if you suspect you are the victim of identity theft, make sure you report it to the Federal Trade Commission at IdentityTheft.gov.

Consider Freezing Your Credit

As of September 2018, you can freeze your credit for free with Experian, Transunion, and Equifax. A credit freeze restricts access to your credit report, which makes it more difficult for identity thieves to open lines of credit in your name.

A credit freeze does not affect your credit score, and you can temporarily or permanently lift the freeze if you want to do so. A credit freeze is different from a fraud alert because with a fraud alert, creditors can still get a copy of your credit report if they take steps to verify your identity.

No Such Thing as Quick Credit Repair

You may have seen signs on the side of the road or ads on the internet offering to “Fix Credit Fast.” The truth is, there is no such thing as an easy fix when it comes to credit.

Late payments, foreclosures, and collections activity generally stay on your credit report for seven years. Chapter 13 bankruptcies stay on your report for seven years while Chapter 7 bankruptcies will be reported for ten years.

The good news is that even if you have some negative information on your credit report, as soon as you start making regular payments and showing “creditworthy” behavior, your score will start to climb.

Know Your Rights

There are specific protections that apply to service members and their families, and it’s a good idea for military families to be familiar with these. Sometimes landlords, creditors, and businesses do not apply these protections unless formally asked.

The Servicemembers Civil Relief Act (SCRA) provides financial and legal protections to active duty (or activated/mobilized) military members. One of the key provisions of the Act limits the interest rate to 6 percent on automobile, home, and student loans as well as credit card debt if the debt was incurred before coming on to active duty.

To receive this benefit, a service member must notify lenders in writing and include a copy of their orders to active duty.

Lenders sometimes apply this cap to debts incurred during active duty. They are not required by law to do so, but it never hurts to ask a creditor about SCRA benefits.

Other important SCRA protections include the ability to terminate residential and automobile leases without penalty when receiving military orders and protections against foreclosure.

Another law that has important implications for military families is the Military Lending Act.

Key features of this act include a 36 percent interest rate cap on products offered to military members and their spouses and certain dependents. This applies to most fees, finance charges, and add on products.

A creditor cannot require you to create an allotment to pay them and cannot charge a penalty for paying back a loan early.

If you have questions about these protections, want to go over your credit report, or want more information on creating a spending plan, visit a financial counselor at your installation’s Family Service Center or call Military OneSource at 1-800-342-9647.

Need help reaching your saving goals? Want to reduce debt and build wealth? Take the Military Saves Pledge and then visit militarysaves.org for tips and inspiration.