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Is There A Bad Credit Student Loan Available?

If you are looking for a bad credit student loan then you already know that your prior history of bad credit is making your search a little more difficult. There are many student loan programs that are not based on credit. For example, Stafford and Perkins loans are based solely on need and do not even require credit checks. The problem is that these programs will not cover the full amount needed for the high cost of education today.

In order to supplement the (no credit check) or bad credit student loan, many students and their families will turn to credit-based loans. Being able to show the evaluators a good credit report will definitely result in better access to funds as well as better interest rates.

Having a good credit history can mean getting a loan with an interest rate that is considerably lower than that charged for a bad credit student loan and that means you won't have to repay as much at the end of your education.

What is good or bad credit?
The first factor considered by any loan officer is the FICO score. This number or score is calculated by the major credit reporting agencies based on a secret and proprietary formula. Even though their exact formula isn't public, several criteria are known, and even obvious.

FICO scores are based on:

  • outstanding debt and defaults
  • number of late payments and how late - 30 days, 60 days, 90 days or longer
  • amount of credit available
  • number of recent credit inquiries and other factors.

These factors are reviewed and weighted with defaults counting very heavily, as well as any late payments. Longer or larger late days count more heavily as well. The number of recent credit inquiries counts less but are still factored into the equation.

Since many students won't even have a FICO score (they have not had credit cards or loans that would generate the data needed for a FICO score) they are judged by the parents' credit history, when it comes to approving loans. Even though student credit history is important, the parents income and credit history will typically count for more in making a final decision.

Both parents and students need to have good credit. That means a FICO score of over 650. Having a score lower than that won't make getting a loan impossible, but it may require you to supply additional information that can influence the decision. Getting that extra information into the hands of the actual individuals who can be influenced is not always easy.

There are a number of other factors that prospective borrowers should keep in mind.

  • Paying on time is important. A history of late payments and incurring late payment charges is evidence of a bad credit student loan risk in the eyes of lenders.

  • Staying within your available credit limits is also important. Avoiding over limit and other penalties shows that you are willing to defer immediate gratification and accept responsibility.

  • Keep in mind that creditors are judging not just numbers, but your character as well.

  • Limiting the number and maximum balance amount on your credit cards can also help.

When there are excessive credit inquiries, lenders assume that you may be having difficulty meeting your current debt load. From that, they infer that your ability to repay additional loans may be more difficult. That would increases the lenders' default rate - loans that aren't repaid. Financial institutions try very hard to keep their default rate low, so they sometimes deny credit to borderline cases.

Meet all your credit obligations promptly and keep all borrowing to a modest level for a long period of time. That makes you look like a very good risk to loan officers, and that means funding a bad credit student loan will be a slam dunk.

  More details about a bad credit student loan and other forms of student financial aid here.





latest news
  • When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you.
  • FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well.
  • Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time.
  • Taking steps to improve your FICO scores can help you qualify for better rates from lenders.








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