Does Joining the Military Help or Hurt My Credit Score?

Chelsy Meyer
Military career

Unfortunately, there aren’t many magic buttons to fix your credit score. Fortunately, on a similar note, there aren’t many that directly tank your credit score either. Both credit gain and deterioration take time and dedication, which your credit score is meant to reflect to potential lenders.

So, joining the military won’t automatically help or hurt your credit score in the most simplistic of terms. However, this decision can impact a whole slew of things that do affect credit. Those things can include: student loans, benefits, housing, salary, and loan qualification.

Before getting into your credit health and how it will be affected by military enlistment, it’s helpful to understand your credit as is, what you can expect from your finances once you’ve joined, how credit is calculated, and how to make a credit care plan as a soldier.

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How bad is your credit right now?

Determining how a military career will affect your credit may have a bit to do with how your credit is now. If you have poor credit you can still join the military, but your credit will be checked for certain job assignments. If your credit isn’t healthy, you may be denied certain security clearances or classified information – you may even be denied a good portion of military jobs as a result of poor credit.

While poor credit won’t automatically deny you enlistment, unpaid loans that are significantly overdue or in collections may. The military is not a quick fix for financial hardship, nor will it fix your credit or destroy it immediately. Being open with your recruiter about your credit history (or any credit concerns) is a great first step in how your military career and credit will coexist.

What you can financially expect once you’re in

In order to understand if a military career will help or hurt your credit, you should understand what your financial lifestyle will look like once you’re an active duty soldier. One major factor in military work for some recruits is either a) the possibility of paid education, or b) the possibility of student loan forgiveness. It is important to note that there are caps, restrictions, and variables that go into your ability to have your schooling paid for or your student loans reimbursed.

Talking to a recruiter or your school’s financial aid office will provide more information for each circumstance, but it’s important to note that this is not a financial guarantee once you join. However, if you are lucky enough to qualify for tuition assistance, this can significantly help your credit score and save you money once you’re enlisted.

Your financial lifestyle once you’re a soldier is a lot different than the financial lifestyle of a civilian. A military career is one that involves a lot of preparation and sacrifice, and in return the military offers a variety of allowances that go along with your base pay – which can often be lower than expected given hours worked for many soldiers. In return, soldiers are sometimes given a housing, food, clothing, and child support allowance. There are also various bonuses, different pay for various duties, healthcare, and allowances for family separation. The pay structure of each person varies based on rank, job title, dependants, housing situation, etc., but military pay does not stop at base pay. A soldier’s finances often change drastically once they join due to all the different aspects of salary, allowances, and bonuses and how each are handled.

Knowing what helps or hurts credit

There are a variety of factors that go into your credit score. It’s not all about how much money you make or how many credit cards you have, it’s about a variety of different factors that are designed to encompass your financial trustworthiness into one score. Payment history, your credit utilization ratio, credit age, new credit, and type of credit are all aspects that go into deciding your credit score. Many of the things your finances can expect once enlisting can cause a positive change in your credit in terms of on-time payments, a steady income resulting in lowering debt and a better utilization ration, and extra allowances for high monthly expenses including housing, food, and medical expenses.

However, with the possible credit perks that come with military enlistment, there are also possible credit woes. Enlisting with bad credit is possible, and getting military loans with poor credit is still possible for many servicemen and women, but getting into a loan with high interest as a result of poor credit may not be the best idea to improve credit health.

Not only that, but big purchases with an enlistment bonus are common with new recruits. With hard inquiries on your credit report in order to obtain a car loan, high monthly payments, and high interest rates for young buyers or those with a low credit score, you may not be doing your credit any favors. Big trucks and flashy cars are extremely tempting for the new recruit, and making large payments on debt may not be as sexy, but making the wrong decision with a large sum of money can also lead to a decrease in credit health.       

Making a credit care plan

Ultimately, whether you’re a civilian or a soldier, credit care is similar for everyone. Deciding if joining the military will help or hurt your credit is really up to you and your attitude towards credit and your financial lifestyle. Create a plan, and work towards credit health and stability with every paycheck and every purchase.

  • Get your credit report – You can do soft inquiries on your credit, or get one free copy of your credit report each year to know exactly where you’re at before beginning your credit care plan.
  • Prioritize paying debt – Make a plan to pay your debt each month and prioritize it over a new truck or other fun toys.
  • Look into military benefits – Check to see if you qualify for student loan reimbursement, but don’t hold off paying on your student loans until you find out. Keep those payments steady.    
  • Budget every pennyMake a budget and stick to it. You’ll want a new budget once you enlist anyway since your housing, food, and utility budgets will be completely different.
  • Follow the rules of credit – Don’t use one credit card to pay off another, never miss a deadline, don’t close accounts, and use your old cards on occasion. According to finance company, SoFi, these tips will help to boost your credit score and not everyone is aware of how they can affect your credit health.   
  • Demonstrate responsibility – Once your finances are getting back on track, look into purchases that show your financial responsibility. Some mortgage rates are lower for military families if you’re wanting to buy a house. You might also consider a loan or a big credit card purchase that you can pay back in good time to show some good marks on your payment history.

In reality, credit scores are meant to be an even gauge of financial responsibility for everyone regardless of their job. For those in the military, there are a ton of aspects involved that may have an effect on your credit score in one way or another. However, the same rules of good credit apply, regardless. Having a healthy grasp on your finances and how to maintain good credit habits will get you through the financial changes of a military career. Even if you enlist with poor credit, it’s possible to correct those issues as an enlisted soldier. Juggle the financial changes that go along with a military career, understand which aspects may help and hurt your credit, and create a credit care plan and your finances will flourish within your new military career.

For more tips and guides, visit our military support resource center. For more information on credit scores, visit the Fiscal Tiger credit score resource center.

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