Saving your credit rating as a veteran, dependent, or military spouse is not as complex as you might think. There are five simple steps you can take to save or repair your credit no matter what situation you may be in. Some require you to be proactive, others are “set-and-monitor” solutions that can help you avoid future problems with your credit report.

Credit Rating Tip #5: Act Early

Do you anticipate a loss of income? Have you been notified of a layoff, furlough, or other income stoppage? Are you expecting financial trouble of any kind?

Don’t wait until you are no longer financially capable of making a payment in such cases–contact your creditors immediately and explain your situation and make arrangements.

Acting early can help for one very important reason–you may find your lenders less willing to report negative credit information if you have already made arrangements before missing the first payment. This is a common strategy among those who know…don’t hesitate to contact your lenders to ask for help!

You could be eligible for forbearance (agreeing to delay payments to a later date, but payments are all still due at some point), loan modification (this option doesn’t really apply to credit cards, but actual loans like your auto loan or mortgage), or some other arrangement.

The key to understanding why acting early helps so much?

If you act BEFORE missing a payment, your creditor is able to take your good-faith actions into account when deciding how to proceed. Miss one payment or more, and that is much harder to come by.

When contacting your creditors, be sure to ask what recourse is available to you from them via the Servicemembers Civil Relief Act (mil-to-mil couples likely have the biggest options here), any relief or assistance programs that may be in effect due to national or local emergencies, etc. Be sure to get ANY relief options offered to you in writing.

Credit Rating Protection Tip #4: Monitor Your Credit

Credit monitoring services are offered by third parties (including the three major credit reporting agencies) and normally for a fee.

The money you spend to actively monitor your credit is worth the expense, but before paying consider the fact that many companies (including the credit bureaus themselves) have experienced data breaches and hacking and many offer FREE credit monitoring to their customers as a result.

Ask your creditors if such options are available to you. Contact the credit reporting agencies and do likewise. You may be entitled to free credit monitoring for a year or more depending, and this is a valuable tool you can use to save your credit rating.

Tip #3: Pay Down Your Credit Cards, But Do Not Close Them Out

One big mistake military and civilian consumers alike make is to work hard to pay off credit card debt, which improves your credit score, only to close the account which can potentially hurt your scores.

Why? The age of your credit accounts is the key–the older your account is, the more clout it has on your credit report. Pay down an old account and keep it active with 100% on-time payments and your credit scores will improve.

Closing the account will hurt your credit score, avoid doing so until AFTER you’ve applied for a major line of credit and never BEFORE you get approved if you are really bent on closing the account.

Tip #2: Establish A Payment Plan

Credit repair is not terribly complicated, it’s just that consumers are dazzled by third-party credit repair advertising that makes it seem like something the consumer is not supposed to do themselves. This is NOT TRUE. Credit repair is in your hands and following some simple principles will help:

1. Pay on time, every time for 12 months or more to improve your FICO scores.
2. Pay down your credit card balances and reduce the amount of your monthly debt compared to your income. The more income and the less debt, the better your lender likes you; doing so also helps your FICO scores.
3. Avoid “junk credit” like department store credit cards with high interest rates.
4. Make a budget to accommodate the above and stick to it. You may have to cut corners for a time until your plan begins to reduce your monthly financial obligations.
5. Avoid applying for new credit when trying to improve your FICO scores. Hard credit inquiries like a credit card application does tend to lower scores.
6. Immediately address any delinquent accounts, missed payments, etc. Don’t delay, get an arrangement worked out as soon as possible.

One of the BEST things you can do when establishing such a payment plan? Setting up an auto-deduction on your bank account to make such payments automatically.

That means your repayment plan will be paid on time, every time if your finances permit and you won’t run the risk of being disqualified for the payment plan due to a breach of the agreement through non-payment.

Tip #1: Don’t Go It Alone When Trying To Fix Your Credit

The Department of Veterans Affairs has options for those who have indebtedness to the VA. Veteran service organizations like the VFW, DAV, AMVETS and others may offer financial counseling options.

And if you are trying to get your finances in order so you can purchase a home with a VA mortgage? Call the Federal Housing Administration at 1-800-CALL FHA to be put in touch with a HUD-approved housing counselor who can assist with advice and information on getting financially ready for a major investment like a home loan.

You can also get financial counseling, credit advice, and other useful assistance from your base Family Support Center or other base agencies.

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Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

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How does VA disability pay affect Social Security Payments? This is a very important question for those who need to apply or continue to receive Social Security and VA compensation for service-connected medical issues. The answer depends greatly on which Social Security disability benefit you are applying for.

Some Background On VA Benefits Compared To Social Security Disability

VA compensation for medical conditions, injuries, and other issues is conditional. The VA must determine that your medical issues are service-connected or service-aggravated and award a disability rating on that basis.

VA disability pay requires the veteran to submit medical documentation, evidence (including photos and letters from those who observe the veteran’s disabilities), civilian care records, etc. A VA medical claim may be reviewed by the VA and given a 0% rating (depending on the medical issue) all the way up to 100% disability.

Compensation Requirements

The VA has complex criteria for awarding disability benefits. You must not have a dishonorable discharge in most cases (punitive discharges may be reviewed on a case-by-case basis), and you must submit a formal claim.

The VA system is unlike the Social Security system in this way; to apply for Social Security disability payments you must have a minimum period of time on the job and have paid a minimum amount into Social Security through your payroll taxes.

The VA does not require such financial contributions from payroll, nor does it require you to have worked within the last five or ten years. Drawing Social Security payments, however, requires you to have worked a certain amount within the last five to ten years.

This requirement is subject to change due to federal law and other variables. Check with the Social Security Administration for the most current guidelines.

VA Disability Award Amounts

The VA awards these percentages in groups of ten, so from 0% to 10%, 20%, 30%, etc. on a graduating scale, as the VA official site terms it. Veterans can never be awarded more than 100% disability. In cases where there are multiple disabilities the percentages are added together but can never be cumulatively more than 100% total regardless.

The VA claims process takes time; some veterans may find it faster to get signed up for Social Security disability benefits, but it’s not necessary to decide which to apply for first as a general rule. There are always exceptions to that, but since these two programs (VA and Social Security) are completely separate, applicants are subject to the waiting times required due to demand and other factors.

Social Security Disability Claims

The Social Security disability claims process is quite different in several ways, the least of which being that you do NOT have to prove that your disabilities are service-related. Your status as a veteran does not affect your claim, and the nature of your military discharge is not taken into consideration.

That is important for those who have punitive discharges who may or may not qualify for VA medical benefits. Social Security payments do NOT depend on whether your discharge was characterized in a certain way.

Social Security disability requires the applicant to submit proof of a physical or mental health issue resulting in a reduced capacity to work “at a substantial gainful level” which may be quantified by a specific earnings amount.

That amount was listed in 2016 as being roughly $1,300 of income per month, and is listed here only as an example of how these rules have functioned in the past. To determine the current level of “substantial gainful” employment, you will need to look at the Social Security Administration official site.

But that’s not the only requirement, a second part to be mindful for is that your condition must be disabling for at least 12 months or must be such that it will “end in death.”

Does VA Compensation Reduce A Social Security Payout?

If you apply for both VA disability benefits AND Social Security disability benefits, will the amount of either be reduced because you draw both?

The key to understanding this issue to is recognize that Social Security comes in two different options: Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). One program allows you to draw VA disability pay with no penalty, while the other features a dollar-for-dollar reduction in the amount of Social Security payments based on the amount of the VA disability payments.

SSI Payments Are Affected By Your VA Disability Pay

SSI is considered a “need-based” benefit and applicants may be subject to monthly income caps to qualify. Applicants who exceed the monthly income caps will not qualify–INCLUDING monthly income that is exceeded due to disability payments to you by the VA.

At the time of this writing, Social Security Income features a $20 “general exclusion” which means the first $20 dollars of your VA compensation is excluded from the dollar-for-dollar reduction in SSI based on your VA benefit amount each month. VA benefits are classified by the Social Security Administration as “unearned income” that does not come from a paying job.

Under this rule, if your VA disability pay is $250, minus the $20 general exclusion, your SSI benefits would be reduced by $225.

SSDI Payments Are NOT Affected By Your VA Disability Payments

SSDI payments are not reduced by “unearned income” such as VA disability payments. Your VA and SSDI payments will be sent to you unaffected by how much you qualify for under VA medical disability compensation.

Qualifying For One Does Not Qualify You For The Other

The VA and Social Security Administration have completely separate processes and requirements for getting benefits such as these. Just because you are approved for one program does not mean you will qualify for another and just because you draw benefits from one does not mean you will automatically get the other. Each must be applied for separately and approved separately.

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Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

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Do you need to learn how to fix credit issues related to your deployment? There are resources available that can help, but the first thing to do is to learn the most common financial pitfalls associated with a military deployment and make a plan to avoid them.

You can’t dodge every financial bullet that comes along, and eventually you may need to take action to fix a deployment-related credit problem. But you can anticipate the most common issues.

Make A Checklist

Military pilots do not fly missions without a checklist that starts with a simple walkaround of the aircraft to visually inspect it. You can do a version of this with your credit. Make a checklist of all your monthly payments and other financial obligations, and go down the list to identify which of your debts can be paid automatically, which cannot, and decide how to deal with those that must be paid “manually.”

Make A Plan

If you have a trusted friend or family member, or if you have a spouse, consider adding one of these trusted people to your “team” of financial helpers via a power of attorney or by adding the spouse or other person(s) to your bank accounts for deployment purposes.

This should never be done lightly, but for those in a position to do so, the extra help in a time of financial or personal emergency can be invaluable.

The arrangements you make to handle manual payments and deal with related issues during a deployment are only part of the deployment plan you should be making. Most service members have vehicles, apartments, or homes, many own pets…all of these issues require attention during the deployment.

Personal Obligations

No, most of these are not related to credit issues…at first. Does your apartment, condo, or home require certain things from you such as lawn maintenance, snow shoveling, or other care?

What happens if those things are not done, delayed in completion, or otherwise not accomplished on time? Some Homeowners Associations (HOA) may feature fines or other consequences for not honoring the terms of your HOA agreement.

That’s where your plan comes in–having a friend or representative for you (single service members have it harder in this respect) to manage such things and avoid any penalties associated with non-compliance. Not all service members have the benefit of a military-friendly landlord or homeowner’s association.

The basic notion here is to anticipate the kinds of trouble you could experience while being away for an extended period of time.

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Anticipate Credit Problems Before You Go

One great step to take before you deploy–contact ALL creditors and tell them you are entering a deployed status. Be prepared to submit proof in the form of official orders or other documentation, but letting your creditors know in advance is a very good idea.

It may even bring some additional help your way if your creditors are willing to work with you to suspend payments for a time, or anticipate delays related to deploying.

When you contact your creditors you should ALSO inform them you are claiming your protections under the SCRA (see below).

Invoking The SCRA

A federal law called the Servicemembers Civil Relief Act (SCRA) offers financial protection for you including suspending, reducing, or eliminating certain financial obligations depending on circumstances. You can get help with certain financial issues that get complicated because of active duty commitments such as a deployment.

However, SCRA protections are not automatic, and must be claimed or applied for individually. SCRA laws can help service members in a variety of areas:

• Evictions
• Maximum interest rates on “Pre-service obligations”
• Installment contracts (rentals and purchases)
• Mortgages
• Trust deeds
• Residential leases
• Motor vehicle leases
• Telephone service contracts
• Storage liens

You must claim and request these protections with each and every creditor you want to exercise your SCRA rights with; in cases that have gone to court you may need legal counsel to fully assert your rights.

You can learn how to get started claiming your SCRA protections by contacting your base legal office, Judge Advocate office, Family Support Center, etc.

It is best to be proactive and do these things before deploying. If nothing else, pursue these options once you return from your deployment, though some SCRA options may be time-sensitive. Know BEFORE you go for best results.

The American Bar Association reminds servicemembers and their families that in some cases legal counsel may be needed to fully assert SCRA protections if a creditor takes a military member to court.

Set Up Credit Monitoring Before You Go

One of the best ways to anticipate credit problems during your deployment is to subscribe to a credit monitoring service. Many people have been offered FREE credit monitoring through a credit card company or other corporation due to security breaches at so many large companies INCLUDING credit reporting agencies. Set up credit alerts before you go whether you have to pay for them or not if you are worried you won’t be able to keep track of things while deployed.

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What To Do If You Have Credit Problems During Your Deployment

The first and most important step to limit the damage to your credit if you have problems during a deployment? Contact the creditors as soon as possible to make payment arrangements. Do so even if you CANNOT pay at the current time–forbearance or other arrangements may be possible. But the longer you wait, the fewer your options become.

Fixing credit issues is a matter of determining whether:

• The consumer is at fault
• The creditor is at fault
• A third party is to blame (identity theft, etc.)
• A credit reporting agency is at fault (erroneous information, outdated information, etc)

In ANY case, you will need to actively dispute credit problems that are the creditor’s fault, third party problems like identity theft, or credit reporting agency errors.

To successfully dispute credit problems that are not your fault, you will need to gather as much documentation as possible, file police reports in the case of identity theft, file disputes with each major credit agency (Equifax, TransUnion, and Experian) in the case of identity theft OR credit report errors.

Disputes–especially those that require police reports–will take more time than you realize, so be prepared for that. You will need to ask each agency or company what their unique procedures are for filing a dispute or a complaint–no two submission policies are exactly alike.

What To Do If You Are At Fault

The sooner you contact a creditor to make payment arrangements or otherwise manage your credit issue, the better. Some types of lending reduce your options for help the longer you miss payments. For example, a home loan can be modified if a borrower misses a payment, but the more payments you miss, the fewer options you have. Refinancing a loan may require you to catch up your missing payments–how many can you afford to pay all at once?

That’s why acting early is so very important; miss a single payment and you may be able to have that amount forgiven, have a delay in repaying that missed payment to give you time to catch up, you could restructure your mortgage to have missed payments added to the back end of the mortgage (depending on the loan and the lender, your experience may vary) and other options.

But what do all these have in common? Borrowers who act fast when they get into trouble get the most help.

If you are deployed and can’t seem to get any progress in contacting your creditors, or if you are about to deploy and anticipate having such problems, it’s a very good idea to consider using a power of attorney to allow someone stateside to assist you in getting your creditors contacted and arrangements made.

This process is more complicated if you are doing it from your deployment; make these arrangements as far in advance as possible for best results.

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Before Deployment

It’s best to expect financial trouble of some kind while you are deployed and plan accordingly. Here are some resources you can turn to while planning that can help:

Military legal assistance office

Your base legal assistance office may be able to help, especially with advice on powers of attorney, last wills, estate planning, consumer advice, and SCRA information.

If it is determined (by you on your own or after visiting a legal assistance office) that you may need the services of a lawyer you can use online search tools such as the Air Force’s Legal Services Locator to find the nearest office with a legal assistance attorney.

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Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

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