By Barbara O’Neill
What factors make service members and their family attractive targets for lenders?
Service members are prone to greater financial challenges because of their unique behaviors. Lenders know that service members are required to maintain financial stability, including a good credit score, to maintain their security clearance. Lenders see this as a sign that service members will work hard to pay off any debts they incur or to at least seek counseling and assistance when they are having problems. Also, service members are not able to “disappear” if they fall behind on their payments. Lenders know that, even in the case of a PCS move, they will be able to find the service member and collect on old debts.
Another fact lenders are aware of is how much each service member earns. Pay scales are available online and can be used by lenders to determine the amount of debt military families are able to support. Finally, service members tend to start borrowing money at a younger age than civilians. This can lead to big financial decisions being made by inexperienced consumers trusting banks and other lending organizations that do not have their best interest in mind.
For additional information, refer to consumerfinance.gov/Service Members/.
Browse more military personal finance Frequently Asked Questions answered by experts.
This post was published on the Military Families Learning Network Blog on June 17, 2013