Should AER Loan repayments be reflected in your credit reports?

SSG Robert Burns — Fri, 25 Jul 2014 09:41:40 -0400

An AER Loan is just like any other loan that a Soldier is responsible for repaying. So why is it not reflected in their credit report? Would this not help Soldiers establish or improve their credit scores?

Response by CMDCM Gene Treants made Jul 25 at 2014 9:50 AM

CMDCM Gene Treants — Fri, 25 Jul 2014 09:50:53 -0400

Since it is a Loan it should be posted to your credit report. Even if repayment is "forced" through a command it is still repayment and should help a Soldier establish better credit.

Response by MSG Wade Huffman made Jul 25 at 2014 10:04 AM

MSG Wade Huffman — Fri, 25 Jul 2014 10:04:17 -0400

As a LOAN, it should be reported as such, also the Service Member should be advised that the loan will be reported and can potentially have an effect on his or her credit (positive or negative).
They should also be aware that just by having a loan it could effect their ability to obtain commercial loans for other purposes (car, credit cards, etc.) since their available income will be reduced as a result of loan repayment (just like any other loan works with credit).
Bottom line, if it's a LOAN (vs. Grant), it should be reported as such; and full disclosure given to the Service Member.

Response by 1SG Private RallyPoint Member made Jul 25 at 2014 10:34 AM

1SG Private RallyPoint Member — Fri, 25 Jul 2014 10:34:29 -0400

Sure, let them choose if they want it reported, and if so then stack on the interest just like any other loan!

An AER loan is NOT " just like any other loan that a Soldier is responsible for repaying"

If we start that stuff, we will have Soldiers doing nothing but sitting at AER to get their credit scores raised based on a loan that is interest free.

Response by SGT(P) Private RallyPoint Member made Jul 26 at 2014 12:09 PM

SGT(P) Private RallyPoint Member — Sat, 26 Jul 2014 12:09:34 -0400

I'm torn on this, I think that if it is a loan that has to be paid back then give the SM the opportunity to have positive remarks on their credit. On the other hand a good argument has been made that since it's directly paid out of their LES it's not showing a responsible payment history so the SM shouldn't benefit from improved credit.

The NC National Guard has a program called the Soldier and Airmen Releif Fund. It's a grant not a loan of no more than $1000, I've had a few of my Soldiers use this given extream circumstances. It pays the SM bills directly when they are months behind, or in some cases the money goes to the SM for car repairs or emergency travel.

I'll end by asking what you all think about making the AER a grant vs a loan?

Response by CPT Private RallyPoint Member made Jul 27 at 2014 8:38 AM

CPT Private RallyPoint Member — Sun, 27 Jul 2014 08:38:55 -0400

I feel it should be reported for two reasons:
1) A central part of any credit decision is the borrower's debt to income ratios. Since the debt does not appear on the borrower's credit, he/she would have to admit to the debt. If they don't, the borrower could be allowed to get in even further over his/her head.
2) It is a serious risk factor that creditors should be aware of. I was a lender for a major credit card company when I graduated college. We often looked for "lenders of last resort" as a red flag. Having a recent AER loan with an outstanding balance should give a lender great pause.

It may seem like I am siding with the banks, but I'm not. I am siding with Soldiers who need help making good financial decisions. Banks like the one I worked for don't play. If the Soldier borrows additional money from a real lender and cannot pay it back, there will be real consequences. Consequences that could result in the loss of property and security clearance. We want banks to know when Soldiers are in financial distress so that we can help them!

Response by SGT Hector Rojas, AIGA, SHA made Jul 27 at 2014 9:08 AM

SGT Hector Rojas, AIGA, SHA — Sun, 27 Jul 2014 09:08:57 -0400

Directly from the AER Website:

"AER is a private nonprofit organization incorporated in 1942 by the Secretary of War and the Army Chief of Staff. AER's sole mission is to help soldiers and their dependents.

AER is the Army's own emergency financial assistance organization and is dedicated to "Helping the Army Take Care of Its Own." AER provides commanders a valuable asset in accomplishing their basic command responsibility for the morale and welfare of soldiers.

AER funds are made available to commanders having AER Sections to provide emergency financial assistance to soldiers - active & retired - and their dependents when there is a valid need.

AER funds made available to commanders are not limited and are constrained only by the requirement of valid need.

For these reasons, the AER assistance program is conducted within the Army structure by major commanders and their installation/organization commanders through AER sections and other related organizations."

This is NOT the same as a Lender, Bank, Credit Union. The sole purpose of the AER as indicated in its charter, is to assist soldiers and their families in times of need. Improve moral and maintain welfare.

Soldiers are not given an option to pay or not to pay. The payments are scheduled and made automatically. I see no rationale to turn this into a credit worthiness issue.

Response by SSG Robert Burns made Mar 30 at 2015 9:12 PM

SSG Robert Burns — Mon, 30 Mar 2015 21:12:01 -0400

This needs further duvin' into.

Response by LTC Jason Mackay made Mar 30 at 2015 11:05 PM

LTC Jason Mackay — Mon, 30 Mar 2015 23:05:49 -0400

I can see this really kicking people while they are already down. AER is designed to help Soldiers, especially by keeping them away from predatory lenders. This would be a step in the wrong direction.

Response by Capt Private RallyPoint Member made Apr 12 at 2017 3:16 PM

Capt Private RallyPoint Member — Wed, 12 Apr 2017 15:16:05 -0400

I think we need to leave the question to the credit reporting to the AER and the credit reporting agencies. I am willing to think they have adequate reason for the path they take.

Remember, as shown in the comments, it could prove either good or bad to a lender.

Sometimes it is best to not change things.

Response by SSG Jeffrey Harper made Jan 2 at 2019 12:21 PM

SSG Jeffrey Harper — Wed, 02 Jan 2019 12:21:31 -0500

Yes it should be reported. If unit would stop making troop go through 6 different people in there Chain Of Command to get AER loan then this wouldn’t have happened. When that does happen the next thing is Administrative paperwork to separate him from the service and maybe all the troop needs is better financial counseling.

Response by SSG Jeffrey Harper made Jan 2 at 2019 12:24 PM

SSG Jeffrey Harper — Wed, 02 Jan 2019 12:24:34 -0500

This pisses me off that unit do that to troops all because it’s tracked on a slide to be briefed to Higher ups. Troop go to payday loans and pay so high interest they can’t pay it back and then when the COC gets notified they wanna separate the troop or they life hell forgetting the fact they refused to help the troop or some one in the troop line said no to it!!