Can Bad Credit Keep You From Getting A Student Loan?
Fortunately, no. Even with bad credit, you’re still able to get student loans.
Most federal loans don’t require credit checks, so you can borrow funds for education regardless of a spotty credit history. Private loans could also be available to you if you are able to get a cosigner or work with a lender that deems your course of study to be lucrative.
Coming up with the money to pay for higher education can be challenging, but loans are helpful in providing support up front. Even if you have a low credit score or a less-than-desirable credit history, student loan options are still available to you.
So how do you get student loans with bad credit?
You have one of two options:
- Federal Student Loans – these are funded by the U.S. Department of Education and they're available to many people regardless of their credit history.
- Private Student Loans – these are offered by a variety of non-government associated financial institutions. Often, they're limited to people with higher credit scores or those with cosigners.
Even if both of these options work for your situation, it’s probably best to apply for a federal student loan first, considering they tend to have lower interest rates and better benefits.
How To Apply for Federal Student Loans:
First, you’ll need to make sure you meet the eligibility criteria, which include the following:
- Demonstrate financial need
- Be a U.S. citizen (or an eligible noncitizen)
- Be accepted/enrolled in a degree or certificate program
- Have a valid Social Security number
If you do meet the criteria, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) to determine which of the following options are available to you.
- Direct Subsidized Loans: These loans are available based on financial need, and they include the benefit of having the Department of Education pay interest while you’re enrolled in school.
- Direct Unsubsidized Loans: These loans are offered regardless of financial need, and they will accrue interest even when you’re enrolled in school.
- Direct PLUS Loans: These loans are available to graduate students or the parents of undergraduates, and do require a credit check.
- Direct Consolidation Loans: These loans enable you to combine all your federal loans into a single loan, which can reduce the complexities with payments.
Federal student loans also offer other protections, like forbearance (in case there are periods you can’t make payments) and income-based repayment plans (which may offer loan forgiveness after a certain number of qualifying payments). Additionally, federal student loans offer fixed interest rates, which means you’ll have predictable payments. No surprises when repaying a loan is a big benefit.
How To Apply for Private Student Loans with a Cosigner:
If you have bad credit, it will likely be difficult to apply for private student loans on your own. A better option is to use a cosigner. If your cosigner has a high credit score and steady income, they’ll be able to secure better terms for the loan than you would on your own. They’ll be equally responsible for your debt, so make you’re able to make your payments on time.
Regardless of what kind of student loan you end up getting, working to improve your credit score can set you up for success down the road as you continue your education. Reach out to ASAP Credit Repair today, and let’s get started on setting up a foundation for your success.