Dear Debt Adviser,
They will be doing a background check on my credit, debt and other things for the Air Force, and it's serious. My car was repossessed for two weeks at the most. But I paid for it and got my car back. Are the records going to show that it was repossessed if I have the car right now?
"Honesty is the best policy" is an old cliché for a reason. Beyond that, honesty in the military is absolutely essential and non-negotiable. The main reason for this is that lives depend on complete trust between service members, and a person who cannot be trusted represents a risk that can't be tolerated. Fortunately, however, perfection is not required, so here's my take.
Credit reports are often reviewed as part of a hiring, promotion or security clearance decision in civilian jobs and for the military. Not paying bills on time can indicate that you don't follow through with promises or are irresponsible. Studies have shown that personal financial worries significantly affect productivity at work.
Furthermore, a person who is in debt may be vulnerable to a number of security issues. But as I said, perfection is not required, just honesty. One way to demonstrate honesty when applying for a job, or in this case entering the military, is to let them know in advance about any negative information they may find when doing a background or credit check.
It says a great deal about someone's character to admit upfront anything that may cause a problem for them. And it gives you a chance to tell your story before they see your report. In a competitive job situation, you may never be asked about a negative credit report. They may just go on to the next candidate.
First, find out exactly what is contained in your credit report. It sounds like the repossession procedure was fully accomplished. I asked Paul DeCoste, of the credit-reporting bureau TransUnion, what your report would likely show. He said it's likely the repossession will appear on your report, along with any delinquency leading up to it.
Since you paid to get your vehicle back, the credit report should also reflect that you "redeemed" the vehicle, and the account was paid in full or is current with payments. To know for sure, order your reports from each of three major credit bureaus at AnnualCreditReport.com.
You may be fortunate, and your lender may not have reported the repossession to the credit bureaus because you paid fairly quickly after it was repossessed. But I wouldn't start celebrating until you check all three of your credit reports.
While you have your credit reports, review them carefully for any inaccurate or out-of-date information and dispute those items with the credit bureau that reported it. It's not uncommon for a credit report to contain errors. Billions of pieces of data are reported every month, and the bureaus do a good job of sending the right data to the right files. No one has a perfect record, so it's important that you do your part by reviewing your report.
You can file disputes in writing or online. The bureau will check the accuracy of any items disputed within 30 days and remove them if they can't be verified. You will definitely want your report to look its best before the Air Force reviews it. Keep in mind that accurate negative information, such as your repossession, cannot be legally removed from your credit report. The repossession will remain for seven years from the date of the first delinquency.
The good news for you, as far as it concerns the Air Force, is that they are not assessing you for risk to lend you money. They are looking at your credit report more for insights into your character and for security purposes. The fact that you made good on your obligation by paying what you owed on your vehicle is what they are looking for.
So, back to my opening statement. Once you know if there are negative items on your credit reports, get them resolved. Let the Air Force know what they will find, what you have learned from your experience and the measures you have put into place to avoid further problems moving forward.
Good luck, and thank you for your service to your country!