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  • Writer's pictureBryan Saeteros

Building Credit: A Guide for Marines

Updated: May 2

Congratulations, Marine! You've taken the first step to financial independence by taking your credit seriously. In this guide tailored to Marines like yourself, we'll explore how to establish a solid credit history.

Understand the Basics of Credit

Before you do anything else, you should understand the basics of how credit works.

Your credit score is Crafted by Experian™, Equifax®, and TransUnion®. The report determines your credit score. This is calculated using credit score models like VantageScore 3.0® which Navy Federal Credit Union uses.

The six key factors that make up your VantageScore 3.0® credit score are:

  • Payment history (40%)

  • Credit history (21%)

  • Credit usage (20%)

  • Total balances (11%)

  • Recent credit (5%)

  • Available credit (3%)

Lenders in the future will assess your credit report and score to set interest rates for credit cards and loans. Higher scores will secure lower rates, while lower scores will result in higher rates. Basically, the higher your score, the less you'll owe.

Get A Starter Credit Card

To start building your credit, I recommend Navy Fed. You set up a checking account with them while in boot camp and if you get the cashRewards credit card, you're pretty much guaranteed to get approved. I will say, be smart with your spending. Treat your credit card like a debit card. If you don't have the money to buy it with a debit card, you should not buy it with a credit card.

Secured Credit Cards

Consider a secured credit card if you tend to overspend. Similar to a debit card, your spending limit is determined by the amount you deposit, typically between $200 and $10,000. Your credit limit is usually equal to or lower than your deposit.

Treat your secured card like a debit card to avoid overspending. If you fail to pay your bill, your security deposit covers the balance. Remember, your deposit isn't used for purchases; it sets your credit limit. For instance, if you deposit $200 and spend $50, you owe $50 on your bill.

Navy Federal's nRewards Secured Credit Card offers rewards for spending, but missed payments may result in fees. Secured cards may have higher interest rates and annual fees. However, responsible use can help build credit and may lead to future upgrades.

Establish a Strong Payment History

Your payment history is a key factor in determining your credit score. Ensuring that you make payments on time is crucial for building and maintaining good credit. This includes not only your credit card balance but also payments for other bills such as car loans and student loans if you have any. Late or missed payments can hurt your credit score. To avoid missing payments, consider enrolling in autopay for your bills.

Maintain a Low Credit Utilization Ratio

Your credit utilization ratio, which compares the amount you owe to your credit limit, is another important aspect of your credit score. Aim to keep your credit utilization ratio below 30%, with an even lower target of around 10%. Paying off your balance in full each month is the best way to manage your credit utilization ratio and avoid paying interest.

Monitor Your Credit Report and Score

As you start building credit, it's essential to regularly check your credit report and score to ensure accuracy. You can access your credit score for free through Navy Federal's credit monitoring services. If you notice any inaccuracies or errors on your credit report, be sure to report them to the major credit bureaus promptly.

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