4 Common Factors that Impact the Military Loan Decision

The military loan decision process often favors the lender. Members of the armed forces face several significant hurdles to being qualified borrowers, among them the lack of a consistent address or other major debts. If you are serving in the armed forces or have recently finished serving, you will have to prove you can make payments through your income, credit history and character in order to overcome these challenges.

#1 Lack of Permanent Address

Many members of the armed forces are transferred frequently as part of their job. They may even have extended stints overseas. A lender likes to know where a borrower will be at all times. This makes it easier to track the borrower down if he or she misses a payment. Along the same lines, a lender needs to know where a piece of collateral, like an automobile, will be in case repossession is necessary. When you serve in the military, you will likely face scrutiny if your address changes, often in the years leading up to a loan. To help overcome the problem, provide a permanent address of a family member or other resource that could be used to find you.

#2 Lack of Other Debts

When you take a new loan, having too much debt can be a bad thing. However, a lender will like to see that you have previously taken loans and paid off debts. This is the basis for a good credit score. Individuals who enter the military at a young age, which is most service people, often do not take loans to attend college or purchase automobiles. These are usually the first loans a person takes. When you miss out on these debts, you will have to be very conscious of areas where you can take debts in order to compensate. For example, think about using credit cards or personal loans while you are young.

#3 Ability to Make Regular Payments

If you are deployed or serving on a military base, your ability to make payments toward a debt may be compromised. It is common for those serving in the military to get behind on payments for this reason. There is little you can do to prove you will pay loans while you are otherwise distracted. However, maintaining a bank account and working with lenders who specifically offer military loans may help. You can also ask about having a cosigner who will reside in the US to assist in obtaining your loan.

#4 Credit History

Aside from starting your credit history young, you will need to be vigilant of all your debts while you are serving in the military. If you miss a payment while deployed, future lenders will fear you will do the same thing. Always assure your debts are paid on time by electing direct payment options. Talk to a friend or family member who is not in the military to ask for help in making payments while you are abroad. This person can volunteer to receive your mail and respond to bills if you are not able to do so.

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