How To Get Student Loans With Bad Credit

November 18, 2011

Student Loans With Bad Credit

student loans with bad credit

Students loans are essential to the funding for a large percentage of students tuition fees, but some aren’t sure if they can get a loan because their credit scores are low, or just out of high school and haven’t had time to build up a good credit history. If you fit into this category, no worries, millions do, but don’t let this fact deter you from getting your degree, as you can still get student loans with bad credit. Below are these bad credit student loan methods that you can utilize, that when used can equate to you getting the funds you need to graduate and get your career started.

Federal Loans With Bad Credit

You can easily get federal student loans with bad credit scores, as many programs do not base acceptance off what your credit score is, some of them include the Federal Perkins Loan as well as the Federal Stafford Loan. The way to see if you qualify as well as how much you qualify for is done by filling out a Free Application for Federal Student Aid. By filling out a FAFSA, you will not only find out what federal loan programs you qualify for, but will also see if you qualify for federal grant programs, which will offer you money that you can use towards tuition and other schooling costs, that you never have to pay back, like the Pell Grant. The loans that you will find that are not credit based will be ones that are referred to as Subsidized Loans, meaning they are based entirely off the financial need of the applicant. They assess your financial need by looking at your income as well as the contribution that is given to you by your family or Expected Family Contribution (EFC).

When it comes time for repayment, federal loans have much more flexible repayment terms, and even have an option called Income Based Repayment where you pay 15 percent of your income each month towards you debt and no more. If you use this bad credit student loan method, you will also be getting fixed interest rates on your loans, which means they never change throughout the life of your repayment, or are not variable, which the Stafford Loan currently has interest rates as low as 3.4 percent, and the Perkins Loan interest rates can be found as low as 5 percent,

Private Loans With Bad Credit

Applying for private loans without a good credit score is a little more tricky. These loans are basically there when you need extra money to cover what federal student aid didn’t. Private loans come with higher interest rates and less flexible repayment options, but still serve their purpose when one needs money for school. Non based private student loans are non existent, so the only way to get private loans with bad credit is to find a cosigner, a parent or guardian, family member, or friend who has a good credit score. What is a good credit score? Well private loan lenders like scores that are above 700, and the higher the score is, the lower the interest rate you will get on you loan, which means you paying less in interest over the life of the repayment.

This method is excellent for those who want to build their credit score in the process of paying back their loans, as lenders will actually transfer the loan to your name after 2 or 3 years of repayment, leaving you with a chance to better your credit score with every on time payment, being that 35 percent of your credit score is actually based off of on time payments. It is also suggested that you enroll in an auto debit program if and when you attain a private loan with bad credit, as doing so lowers your interest rate percentage.

 

Category: Stuent Loans For Bad Credit

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