If you have debt post-service you must read this article. Find out all the details you must know and answer your doubts. Keep reading to discover all about it!
If you have debt post-service you must read this article. Find out all the details you must know and answer your doubts. Read on to discover all about it!
If you have debt post-service, you’re not alone. In fact, service members and veterans tend to have more debt than civilians. So, don't worry and start reading all the things you must know about your post-service debt.
When you were on active duty, lenders may have ignored your credit score which is an indication of how well you handle your debts because of your relationship to the military. As a civilian, though, your credit score will be the single biggest factor in your ability to get a loan and secure lower interest rates.
Whether you knew it or not, you may have been protected from high credit card repayment rates while you served, thanks to the Servicemembers Civil Relief Act. When you leave active duty, though, standard interest rates can kick in.
Credit card rates are usually well into the double digits, so interest charges can pile up quickly. Paying those bills late can damage that all-important credit score. Even carrying a large balance can start to hurt your credit. Try to stay on top of your credit card bills as much as possible, and be sure to read the fine print and know when payments are due.
You may be tempted to use nontraditional means, like a payday loan or a pawnshop, to help you pay your bills. You wouldn’t be alone: According to a 2012 survey, 35 percent of military members use these types of services. But you may want to tread carefully.
While you were on active duty, the Military Lending Act capped the rates many lenders were allowed to charge at 36 percent. As a veteran, that protection does not apply, and you could be charged as much as 100, or even 500, percent. Those high rates make these types of loans extremely difficult to pay back. That means it’s more important than ever to understand the terms of your loan.
Finally, you may consider consolidation as an option for managing debt. Generally, consolidation is when you take out one big loan to cover all of your existing debt, leaving you with one loan to repay, usually at a lower rate. The Veterans Administration does not specifically offer a debt consolidation loan, but it does offer a type of home refinancing that is often referred to as one.