What Servicemembers Should Know About Building Their Credit
Whether you’re newly enlisted or a seasoned servicemember, building strong credit is a key step toward long-term financial health. Your credit score affects more than just loan approvals, it can impact your ability to rent housing, qualify for a security clearance, or get a cellphone plan.
The good news? Building credit doesn’t have to be complicated. With a few smart habits and the right tools, you can set yourself up for success, wherever your military service takes you.
Why Credit Matters for Servicemembers
A healthy credit score can show lenders that you’re reliable and responsible with money. That’s essential when financing a vehicle, applying for a mortgage, or getting a credit card. Strong credit also supports:
- Qualifying for better interest rates
- Lowering insurance premiums
- Meeting your branch’s financial readiness goals
- Smoother transition to civilian life after service
Because military life often includes frequent moves and deployments, it’s especially important to establish and maintain strong credit early in your career.
How Servicemembers Can Start Building Credit
If you’re just starting out or trying to repair past credit mistakes, here are a few ways to begin building or rebuilding your credit:
Open a Credit Card (and Use It Responsibly)
A credit card is one of the fastest ways to establish credit. If you’re new to credit, consider applying for a secured credit card backed by a cash deposit.
Use the card for small purchases, then pay it off in full each month. That shows lenders you can handle credit without carrying a balance or paying interest.
Pay Your Bills On Time
Your payment history is the most important factor in your credit score. Late or missed payments can stay on your report for up to seven years.
Use automatic payments or set reminders to make sure you’re never late—even while deployed. Many credit unions offer tools to help servicemembers manage payments from anywhere.
Keep Your Credit Utilization Low
Credit utilization is the percentage of your available credit that you’re using. Try to keep your balances below 30% of your credit limit. For example, if you have a $1,000 credit limit, aim to use no more than $300 at a time.
This shows lenders you’re not over-relying on credit and can manage it wisely.
Avoid Opening Too Many Accounts at Once
Each time you apply for new credit, a hard inquiry is added to your report. Too many inquiries in a short period can lower your score and make you look like a risky borrower.
Only apply for new credit when you need it and be strategic about which accounts you open.
Monitor Your Credit Report
Check your credit report regularly for errors or signs of fraud. You’re entitled to one free report each year from each of the three major credit bureaus: Equifax, Experian and TransUnion.
If you spot a mistake, dispute it right away. Staying on top of your credit helps you catch issues early before they hurt your score.
Credit Tips for Deployed Servicemembers
Managing credit while deployed can be tricky, but preparation helps. Here are a few tips:
- Set up automatic payments for all recurring bills
- Notify your credit union about your deployment so your account can be flagged for extra protections
- Consider placing an active duty alert on your credit report, this requires lenders to take added verification steps before opening accounts in your name
These steps help reduce the risk of missed payments or identity theft during your deployment.
Your Credit FAQs, Answered
What credit score should I aim for?
A FICO Score of 670 or higher is considered good. The higher your score, the more financial opportunities you’ll qualify for.
Can military service affect my credit?
Your service won’t directly impact your credit score, but challenges such as moving or deployment can lead to missed payments if you’re not prepared. Staying organized and proactive is key.
Is it better to carry a balance on my card to build credit?
No. You don’t need to carry a balance to improve your credit. Paying your card in full each month is the best way to build credit without paying interest.
Your Credit Journey Starts Now
Building credit is an important step toward achieving your financial goals—whether that’s buying a home, funding a move or planning for life after service. Start with small, consistent steps and make smart decisions along the way.
And remember, wherever you’re stationed, Service Credit Union is here to support your financial readiness.
