Military Money and Finance

MILITARY LOANS
Can I Get Military Loans With Bad Credit?

Are you looking for a military loan but have a troubled credit history?

If you've made mistakes in the past that affect your credit, you're not alone; thousands of military servicemembers get nervous when filling out a credit application. Here's the good news; there are ways to salvage your credit and make yourself more attractive as a borrower. The not-so-good news? Some of techniques require time to work. If you start working to repair your credit before you need it, you stand a much better chance of getting approved for a military loan, a VA home loan, military auto loan or other types of credit.

YOUR CREDIT REPORT

The first place to start fixing your credit is with one of the three major credit reporting agencies; Equifax, TransUnion or Experian. Did you know you're entitled to a free copy of your credit report? This is required by law—you can't be kept in the dark about your credit rating. Contact Equifax, TransUnion or Experian and take a long look at your report. Some people find errors on their report that could disqualify them from a military loan or VA home loan unless disputed and removed. Those errors can include legitimate bad credit information which should have been dropped from your credit report after a standard period of time or bad credit information that should be on someone else's report but somehow wound up on yours.

You may notice bad credit reports on accounts you never opened. Are you a victim of identity fraud? How do you know for sure? Sometimes the only way to detect identity theft is by reading your credit report. If you find bad information about accounts opened without your permission, contact the credit agency's fraud investigation department and begin a complaint. Depending on the credit agency, you may be required to file a police report and furnish copies or a case number to start the credit union's investigation. While the items on your credit report are in dispute, they may be temporarily removed from your report until the end of the process. This can help you during a credit check, but ideally you should be working to clear your credit report as early as possible before you attempt to get new credit.

YOUR DEBT-TO-INCOME RATIO

Military home loans, military auto loans and other military lending products take your current income into account when the loan officer determines your credit risk. If you have too much debt and not enough income, the bank won't give you a loan. To make yourself a better risk, decrease the amount of debts you have before you apply for a loan. For high-dollar military loans such as a VA mortgage or an auto loan, your debt potential may be a factor, too. If you have three credit cards with limits of $10,000 each, your debt potential is $30,000. It doesn't matter that you carry low balances and make on-time payments; you can still get yourself into $30,000 of debt at any time. To make yourself a better credit risk, get rid of multiple credit cards and reduce your debt potential as much as possible.

TIMELY PAYMENTS

When you apply for a military loan, you want to come to the lender with a history of on-time payments. If you start planning for a loan far in advance, you can insure a six-month payment history of timely bill paying. Even if you've had trouble in the past, the more history you have as a dependable credit risk, the better your chances of getting approved for that military loan. Missing a single payment may not damage your credit rating, but the more dependable you are, the better your chances.

When you apply for a military loan, your career in uniform goes a long way toward helping you get approved for a line of credit, but if you have a troubled credit history you'll need to take the steps listed here to get you on the road to a better credit rating. Don't assume you can't get credit because of mistakes in your past; with some careful planning, a bit of research and timely payments, you can get the credit you deserve.