6 Tips for Getting a Student Loan with Bad or No Credit
BY JANE HURST
Many people want to attend college but are afraid they cannot afford to. Some people have worked hard to save money but it is not enough. Others want to go to a better university but its cost is out of their reach. Most people will have a hard time affording college, but with a bad or no credit it can be nearly impossible. Here are six tips for getting a student loan with bad or no credit.
1. Establish credit – One way to be able to get a student loan is to establish some credit. If you do not have any credit to your name you can check with your local bank or credit union about getting a student credit card or taking out a small loan. If you make consistent payments and do not overcharge you should be able to establish a good credit score. Banks and credit unions will work with you to help you maintain your credit score once you have established one.
2. Turn bad credit around – If you have a bad credit score you can take out a new loan or credit card and try to make your payments on time. Clearing out your old debt will go a long way to raising your credit score. Some credit card companies will work with you if they know that you are trying to turn your credit around. Call up anyone you owe money to and see if they can work something out for you. Bad credit can be turned around.
3. Know your loans – There are many types of student loans available and not all of them rely on a credit score. Sometimes states will award loans and scholarships are based on need only and not on credit. FASFA is a needs based loan that the government has set up. The amount of money you receive depends on your need. Your credit score is not taken into consideration. Private loans will look at your credit score. If you can fund your college career with FASFA and state loans you will not have to worry about private loans. You may be able to get away with fewer private loans if you qualify for FASFA. Go online and fill out your FASFA form today to see how much money you can receive towards your college degree.
4. Borrow the maximum – If you qualify for a FASFA or state loan you should borrow the maximum amount you can as long as it is subsidized. An unsubsidized loan will require you to make payments while you are still in college. A subsidized loan will not require payments until you are out of school for six months. Then you can start paying or make different payment arrangements.
5. Get help – If you need help figuring your way around bad credit you can check out personal finance blogs and sites that have guides such as the LearnBonds guide for people with bad credit. You can also ask at your local band or credit union. It is important to have good credit coming out of college and for loans. Take the time to find out exactly what you need to start on the road to a good credit score today.
6. Maintain credit – Once you have gotten your loans and good credit score it is important for you to maintain your good credit. Future purchases will depend on a good credit score. Find out exactly how much money you have outgoing and incoming and make sure your outgoing balance does not exceed your incoming one. Try and create a savings for emergencies and for fun trips or pleasure. Many banks offer special holiday or vacation savings rates to help people save their money and have a good time. Good credit is a great thing to have and keep. Be sure you are educated when it comes to your credit score so you can expand your education later.
Jane Hurst has been working in education for over 5 years as a teacher. She loves sharing her knowledge with students, is fascinated about edtech and loves reading, a lot. Follow Jane on Twitter.