Credit plays a major role in getting financial aid and especially when it comes to your studies and you wish to apply for a student loan. For getting a student loan sanctioned you will have to show a good credit history and in case credit is bad it might affect your capacity to get student loan.
Options for Students With Bad Credit
Bad credit is not an issue with securing finance for your studies though it might require some hard work to get your students loans passed. One of the best options available for those with bad credit is Federal Student Loan.
This is because Federal Student Loan will provide student loans for your studies without considering your bad credit. There are subsidized as well as unsubsidized loans of this type for students. Among various types of federal loans only Parent and Grad PLUS Loans are in need of credit check and both these loans are non-need based ones.
Myths on Student’s Credit
- One of the most common myths on students and credit is that there won’t be any credit history for students. This is wrong for most of the students do some kind of job nowadays and pays off some kind of bill which provides him with some credit history.
- Yet another common myth on students is that those opting for a student loan are fresher from high school. This is wrong for most students applying for student loan will be studying for second or third degrees. There are professionals too who are returning for a course related to their career. All of the students might be capable enough to qualify for a student loan.
- It is not right to think that students are relying on the credit of parents for student loans. This not right for students both young as well as old can qualify for students loans due to good credit history they are possessing.
- It need not be right to think that all parents have good credit. There are several parents with poor credit history or bad credit history and most of them cannot be considered as co borrowers or co signors.
Who Are Eligible?
- Those students who are financially dependent will get students loans and will qualify for Stafford Loan limits. This type of loan will increase as you pass each year of study.
- Independent students will get double amount than dependent students as loan for their studies
- Stafford Loan also approves students whose parents have faced a turn down to get any loan based on credit.
- $20,000 or more is given every year as loan without any credit check to students who are graduates or adult professionals.
Getting a Private Loan With Bad Credit
All private loans are based on credit and hence you need to make some arrangements for getting private loans with your bad credit. First thing to do is to find a co signer who has faith in you and is having a very good credit history. Co signer need not be parent or guardian and can be a relative or friend.
Leveraging of Student Loans
Making student loan payment on time is the best strategy for making good credit record. If you want a higher credit seek the help of a co signor. If you have made 48 payments consecutively without any fault co signor will be released from loan by vendor. After that the credit history becomes your own. You can also ask your lender to release the co signor once you have made certain number of payments.