The result can sometimes be surprising. Moving around with the military doesn’t always help your credit score, although significant effort has been made in recent years to improve awareness within the financial industry of the circumstances of military personnel. We’ve put together some useful tips to help maintain a healthy credit score regardless of your location.
How does a credit rating score work?
Your credit score measures you as a financial risk. A poor credit score can make it difficult to borrow money. This can affect your application for credit cards, motor finance, a mortgage and other services such as mobile phone contracts.
How is your credit risk measured?
All lenders want different things and have their own ways of scoring but are likely to take into account the following:
- Address history
- Length of employment
- Annual Income
- Previous and existing creditors and your credit payment history
- County Court Judgments
What is likely to make you a poor credit risk?
- Excessive debt with no spare income to support more credit
- Too many credit searches within a rolling two-year period
- Poor credit history such as missed or late payments
- Not having any credit history can be detrimental to your credit score
- Frequent house moves, in particular postings abroad where BFPO addresses aren’t always recognised by lenders’ systems
How to help your application for credit when on the move
- State you are a member of the Armed Forces when applying for credit
- Provide a full postal address including postcode. If it is a BFPO address, include the unit you’re attached to. A letter from your Commanding Officer is also useful
- Register to vote in the UK, which will put you on the Electoral Register. This needs updating every time you move in the UK
- Serving overseas for long periods of time can make building up a good credit history difficult. Keep a record of financial transactions overseas to hand, such as credit cards and bank statements. This will help to show that you can handle your money wisely
- Manage your debts and pay your bills on time
- Check your credit report before you apply for any credit. You can obtain a copy from credit reference agencies such as Equifax, Experian and Callcredit. If you find any discrepancies, you can challenge them with the credit bureau
- Keep the balance on your credit cards as low as possible
- Make joint applications for credit such as motor finance. This will help both you and your partner build up evidence of good credit management for the future.
How to improve a poor credit rating
There is no quick fix. A reputation for being a bad credit risk can take time to improve, but there are steps you can take to help the process along.
- Make sure you pay your bills on time. Set up a reminder to prompt you when a payment is due or set up a direct debit and make sure there will be enough money in your account to pay the direct debit
- Stop using your credit cards to avoid adding to your debts
- Only take on new credit accounts if you have no other option. If you need to borrow more, look to extend your existing credit provisions rather than applying elsewhere
- If you have any spare money, look to reduce your overall debt by forming a payment plan. Start with the cards and loans that charge the highest interest and work your way down
- If you’re struggling to make ends meet talk to the credit company or seek advice from a credit counselling service to help you get back on track with your finances.
If you feel that you’ve been treated unfairly when seeking credit due to your military lifestyle, you can appeal to the Financial Ombudsman .
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