How military members can boost their credit score

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By Michelle Fox, CNBC

It’s not necessarily an easy transition from military life to a civilian one.

You’ll have to find a job and a place to live, to start.

“In a lot of ways, you are taken care of in the military. You get free medical and dental, and you just go to the local naval hospital for that service,” said Jim Lebenthal, a CNBC contributor who is also a longtime investment expert and current partner at Cerity Partners.

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“When you come out into civilian world, there are a lot of things you may be doing for the first time on your own.”

Lebenthal would know. He was a lieutenant in the U.S. Navy aboard nuclear attack submarines, before retiring in 1997. During his seven-year commission, he was awarded two Navy Commendation Medals and four Navy Achievement Medals.

His advice: Start thinking about your credit score even before you leave the service, as establishing credit and building a pattern of responsible borrowing habits takes time.

A credit score gives lenders a picture of your financial life. It determines the interest rate you will pay for any loans, including a mortgage — or whether you’ll qualify to get a loan at all.

The better the score, the lower the rate. Credit scores range from 300 to 850. A good score is generally above 700, and those over 760 are considered excellent. The average national credit score is 706, according to FICO, a leading credit-scoring company.

To establish credit early on, Lebenthal suggests military members apply for a credit card or two, perhaps even financing a car through an auto loan.

However, he’s not advocating racking up a bunch of debt.

“Have a sensible amount of debt so that the credit-reporting agencies have a track record on you,” said Lebenthal.

“Do not go high on the hog and load up on debt that you will have trouble paying back later.”

It’s important to use your credit wisely, as many factors can negatively impact your score and signal to a lender that you are a risk. Not paying bills on time, maintaining high balances on cards and opening too many accounts too rapidly can plunge a score several hundred points.

To keep tabs on your score, take advantage of the one free credit report a year you are entitled to from each of the three major credit reporting agencies: Equifax, TransUnion and Experian. You can contact each company individually or go to annualcreditreport.com.

Disclosure: Invest in You: Ready. Set. Grow. is a financial wellness and education initiative from CNBC and Acorns, the micro-investing app. NBCUniversal and Comcast Ventures are investors in Acorns.