College Loans for Students with Bad Credit
How to Get a Student Loan With Bad Credit
One of the great benefits of federal student aid has been its ability to give students with bad credit histories or no credit histories access to the funds they need to cover the costs of college.
Every year, tuition at America's colleges seems to increase by about double the current rate of inflation. In order to meet the rising costs of college, students are turning to private student loans in addition to federal education loans. Today, almost 25% of all student loan debt comes from private student loans.
This shift toward private lenders brings the issue of poor credit scores back into the arena of student loan finance.
Private student loans: No credit equals bad credit
The facts are simple. College tuition is rising too fast for federal sources of student aid to keep up. For students unable to pay for college with Stafford loans and other forms of guaranteed aid, private student loans may be the only option available for college funding.
If you have to take the private student loan option, your lack of a credit history will translate into a bad credit history to most student loan lenders. In order to qualify for these types of loans, you'll need to bolster your credit worthiness.
Student loan finance tips
- Apply for aid using the FAFSA. The Free Application for Federal Student Aid (FAFSA) is the first stop for all college students seeking loans and grants. Many college loans and grants are based on financial need or are awarded without a credit check. Stafford Loans and Perkins Loans should be your first line of school funding if you have bad credit.
- Get a co-signer. If your credit scores don't reach the level required to land a private loan, find a trusted friend or family member who's willing to co-sign your private student loans.
- Shop for private student loans. Just like a standard consumer loan, you'll want to shop around for the best combination of interest rates and repayment terms. Depending on the current market conditions, you may be able to take advantage of competitive lenders.
- Get a job. If your student loan finance plan includes private student loans, having a job will help you in a couple of ways. First, it can add a polish to your credit history and make getting a private student loan easier. Second, it can help reduce the amount of private loan funds you need.
If you're getting ready for college, you need to know how your credit score stacks up. There's no time like the present to get into the habit of good financial practices.
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