Managing your money: Get credit where credit is due

  • Published
  • By Senior Airman Andria J. Allmond
  • 512th Airlift Wing Public Affairs
( Editor's note: this is the first in a three part series covering good credit) 

You want it. No, you need it. But how can you get it? 


There are three criteria that establish good credit: Character, Capacity and Collateral. Establishing credit character must be created first in order to develop credit history. 

"Everyone should know the options available for establishing credit," said Shannon Bertram, Fort Sill National Bank proof operator. "It is seen by most as a catch-22 in that if you don't have any established no one will give it to you. But, there are ways to go about ascertaining a good credit report." 

Credit character is a banking term that defines the measurement of a person's willingness to repay their debt. This is shown by items such as length of employment, length of current residence, but mostly past credit experience. 

Credit capacity is the term used to describe an individual's ability to repay the debt and is determined by employment, income, current outstanding debts and monthly expenses. 

Collateral is the amount of available resources that a lender can assume in the event a borrower fails to repay the debt. Savings, property and investments are examples of these resources. 

"Credit character has to be established before any other elements come into play," said Anita Taylor, FSNB branch manager. "There are five steps someone can take in order to establish credit character for the first time. By following these steps, in about a year, you can have a credit report that indicates a history of on-time payments." 

Step one: Apply for a pre-paid credit card
Pre-paid credit cards function like a regular credit card except they are pre-loaded with any denomination of money the user would like to put on it. This prevents the user from falling into debt. Also, another option would be to apply for a gas card from a major oil company. 

Many of these companies will extend credit for new credit applicants, said Ms. Taylor. 

Step two: Ensure timely payments for all contracts or obligations
These obligations include rent, utilities, taxes and divorce support payments. Credit agencies report late or nonpayment of these financial responsibilities, as well as credit delinquencies. 

Step three: Maintain a spending budget
A budget should be sustained in line with income. People interested in establishing credit should try to include a monthly savings deposit of $50 -$75 per month within this budget. 

"The savings is important to have in an emergency situation," said Ms. Bertram. "If you're already putting yourself on a budget it's a good time to get into this habit. If something happens, like a person loses their job or they get hurt and can't work, they would need to have that savings, so they can pay their bills and avoid going into debt. Also, that money can go towards helping establish credit through a secured credit card" 

Step four: Maintain and apply for a secured credit card
Continue the first through third step for six to 12 months. If at least $300-$500 has been set aside in a savings account during this time, an individual can apply for a secured credit card from a lending institution, said Ms. Bertram. 

"A secured credit card is like any other credit card, but is designed for applicants who are trying to establish or repair credit. A deposit into a savings account must be made by the card candidate, which they cannot touch during use of the card," said Ms. Bertram. "That savings will earn interest while it sits in the account. Using this secured card to pay budgeted living expenses as well as using a pre-paid credit card or gas card will build credit faster." 

Step five: Continue all four steps for 12-24 months
While continuing the steps, credit and other obligations must be paid on time and for the required amount. In about a year, credit reports begin to show a history of on-time payments. It is at this time a secured card can be replaced with a card that offers more attractive terms to fit the user's needs, if they choose. 

"Airmen and their families who are interested in receiving general finance information can contact the Airman and Family Readiness Center at (302) 677-6930," said Jennifer Johnson, 436th Airman & Family Readiness Center community readiness consultant. 

Airmen and their families can take advantage of the one-on-one finance help through A&FRC. They can also find a listing of upcoming finance classes held on base. A&FRC posts their information at

Interested Airmen and their families can also call the number listed above or may ask to be put on the A&FR monthly mailing list.