Earning High Scores in the Credit Game

Your credit score, a three digit number ranging from 300-850, is the most important factor for low interest military loans with the best possible terms.

Higher credit scores send a message to lenders that you're a lower credit risk, and that's good news for both of you. But without much notice, your credit score can fluctuate quite a lot, depending on how responsible you are with your current financial commitments, and how closely you watch your score. Check your credit score every 6 months to see if anything has negatively impacted your credit status.

Aim for a credit score of 750 or more; under 600 and you're considered a credit risk, putting you at a disadvantage for getting low interest rates and flexible credit terms.

THE HIGH FIVE OF CREDIT SCORES

1. Pay your bills on time - your payment history makes up 35% of your credit score, making it the single most important factor in of the high-five for a high credit score.

2. Don't let an error in your credit report cheat you out of getting the best military loans. One out of every four credit reports contains a serious mistake that will remain on your report, unless you take steps to correct it. Know your credit score by checking your credit report semi-annually. At annualcreditreport.com, credit reports are available for free.

3. Develop a credit history by getting a credit card and using it responsibly. This allows credit bureaus to track your payment history while you build good credit to back up your eligibility for low-interest loans.

4. Don't max out your credit card balances. Limit each credit card balance to no more than a recommended 30%-40% of your total credit limit allowed on that card.

5. Lenders appreciate credit diversity; maintaining different kind of credit shows that you can manage everything from credit cards to installment loans (such as a car loan). Mix it up; don't be afraid to vary your debt and manage it all responsibly.

AVOID LOWER CREDIT SCORES

1. If you are new to managing credit, avoid opening too many accounts. This tends to lower the average age of your credit cards and that results in a negative hit to your credit score.

2. A non-active credit card that you've held over time is better for your credit score than a brand new card. Don't close old or unused credit cards to raise your score, just don't use them.

3. Signing up for too many credit cards can hurt your score; too many companies requesting your credit report makes you seem desperate for credit, and that has a negative affect on your credit score.

4. Opening multiple credit card accounts won't help with your credit diversity; the ideal mix is between secured loans (home or car loans) and unsecured loans (credit cards).

5. Delaying a loan decision can hurt your score, which can in part be judged by the length of time it takes for credit inquiries from lenders to take place. Research and compare rates, but make your decision within a two week time frame.

If your credit score is low, don't be discouraged; there is a lot you can do to re-establish your credit and build a good credit score. Time, patience and diligence in paying your debts are on your side. And, as military servicemembers, you can even get reasonable terms on a military loan with bad credit.