Paycheck Chronicles

Money May Be A Team Sport, But Credit Is Not

Wedding costs

I’ve never been a military spouse, but as an Army veteran I’ve got a tight relationship with a very fine lady who was. While my wife and I might banter about the details and tradeoffs of her time as a military spouse, we agree the military lifestyle can sometimes force military spouses into the back seat of a fast-paced, and often topsy-turvy, life. But when it comes to credit, being a passenger is not good enough.

Your track record for managing credit can wiggle its way into your life in several not-so-obvious areas. Your ability to get a cell phone plan, rent a house or apartment, land a new job and even how much you pay for auto insurance can be affected by how effectively you’ve managed credit. Of course, your access to loans – at the best possible rate – is also closely tied to your mastery of credit and debt. In the military, this skill is mission critical. Financial issues are the No. 1 reason for the loss of security clearances.

Undoubtedly, it’s a big deal for you and your family. I’m fond of saying marriage and money are a team game, but when it comes to credit, it’s a team and an individual endeavor. While you may borrow and buy together there are no joint credit scores — you each have your own.

Let’s explore the practical reasons for having a strong personal credit reputation and how to build it.

Why You Need Good Credit

You’ll probably need to use it.

No, I’m not saying run out there and ring up a bunch of credit card or other high interest debt. But, there are times when having good credit will open opportunities that might otherwise be unavailable. For example, a solid credit reputation is a big advantage when it comes to borrowing for big ticket items like a home or car. And if your name is on the application, the lender will look at your track record. If you don’t have any credit history, you won’t automatically be disqualified, but you’ll likely have a better chance of acceptance if you can show that you’ve managed credit responsibly in the past.

Two can be better than one.

Sure, your spouse can apply for credit that you can both benefit from. However, two strong scores – and the income you each bring to the table – may create more options than one.

You could be on your own.

This isn’t fun to think about, but a divorce, death or deployment could have you applying for credit on your own and if that time comes, you want your “credit resume” to be long and strong.

How to Get Started

One step at a time.

The two biggest things you can do to build your credit reputation is to make on-time payments and minimize what you owe, especially, on credit card-type accounts. As a military spouse, you may already have joint credit accounts that are being reported to the credit bureaus. Whether you realized it or not, these accounts could already be helping —or hurting — your credit record. Visit annualcreditreport.com, the only official website authorized by the government to provide you with an annual free credit report from each of the three nationwide credit reporting agencies.

Joint accounts.

If you don’t already have joint accounts with your spouse, consider opening at least one. If your spouse’s credit score and record are spotless, a low- limit credit card or store card in both your names shouldn’t be difficult to get and your joint good habits will begin to create your individual record.

Authorized user.

Parents will sometimes add children to one of their credit cards as an authorized user to start them off on a good foot with credit — while closely watching and coaching. This can work for married couples, too. You might not need the oversight, but you can begin to build your own track record as an authorized user on your spouse’s accounts.

Secured credit card.

With a small cash outlay to your bank or credit card, you can set up a credit account that is secured by your deposit (typically, in a certificate of deposit, or CD). Although there is no risk to the lender, your account activity is reported like a normal credit card and, if you’re responsible, can help build your credit score.

So, to return to my original analogy, when it comes to credit, make sure you put yourself in the driver’s seat rather than cruising through life as a passenger. You and your finances will be stronger for it.

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