I'm not aware of any requirement for military personnel (O's or E's) to maintain a particular credit score, but at least four other things do come into play:
- All military personnel are expected to behave responsibly, to keep their word, and to discharge debts they owe. Now, "debts they owe" is subject to some interpretation, as we've discussed on the threads related to walking away from home mortgages.
- On a more concrete level, almost all military personnel must maintain a security clearance. Being in a bad financial situation makes an individual more susceptible to attempts to gain sensitive information from them, so declaring bankruptcy or having other adverse actions on your credit report can lead to an individual being barred from access to sensitive material or being denied renewal of their clearances. This can be bad or very bad from a career standpoint.
- Depending on the circumstances, getting yourself into a bad financial situation can properly be viewed as demonstration of poor judgment. This will be more important if the individual is more senior (enlisted or officer). Poor judgment (on or off duty) is sufficient reason for a boss to downgrade a fitness report.
- If an individual has financial trouble (whether his/her fault or not), it may make him/her exempt from deployment (because the situation could get worse, and bosses in the field expect people to have their minds on the job at hand. They especially don't want to have t send somebody home to deal with the other issues that attend a financial meltdown). Being non-deployable is not career enhancing.
So, your friend is probably assessing the situation correctly.
The military is a very paternalistic environment. People get their pay, and then they get quarters provided for themselves and their family. If they don't or can't live on post, they get a monthly allotment to pay their rent. The military takes care of all their medical expenses and most of the expenses of their family. There are plenty of support services, from chaplains to counselors to gymnasiums to hobby opportunities. So, given all this handholding, the military leadership expects people to stay on a fairly even keel, to eschew the promise of the financial "jackpot" that might come from taking more risk in favor of a sedate, steady, conservative financial life. An officer, and especially an O-5, is getting paid enough that there should be no trouble in maintaining a comfortable life for a family. If someone gets in trouble by taking greater risks, there's not a lot of sympathy. Now, the big drop in RE prices is an unusual event, and if a servicemember got in trouble because his primary residence dropped in price and he had to sell it at a loss in order to move, that would gain some pity points. But if someone is holding a property as an investment and the price drops--not so much.