More than 50% of Americans have Poor to Very Poor credit scores.
This results in a lot of problems, such as the inability to qualify for loans. Bad credit holds people back, including those who might want to go back to the academy.
Studying in the U.S. for free is almost unheard of. Students will have to request student loans if they have no savings.
But, is it possible to qualify for student loans with poor credit?
The good news is: yes. There are some lenders who are willing to look past your credit history. All you have to do is show that you’re capable of paying off the loan.
Read on and find out how you can get student loans with poor credit.
Get a Credit Report
Don’t assume that you have bad credit right off the bat. Check first if you indeed have a poor credit score.
You can get a credit report from the three major reporting agencies – TransUnion, Equifax, and Experian. Note that you can only request a report once a year from each agency.
Credit scores are in the 300 to 850 range for the most part. Lenders usually use the VantageScore model, where an Excellent score in anywhere between 700 to 850.
A score of 700 to 749 is in the Good range, while the average American score of 682 falls in the Fair score range, 650 to 699. If you’re in these ranges, then your credit score still looks good. Don’t do anything to worsen it!
However, anything lower than that means that you are a high risk to banks and lenders. A 550 to 649 score is Poor and anywhere between 300 to 549 is Very Poor.
If your credit score is in the Poor and Very Poor ranges, then you’ll need to get student loans with poor credit. But there’s hope! Read on to the next tip.
Improve Your Credit Score
If you can wait for a few months before requesting student loans with poor credit, why not take the time to improve your credit score and increase your chances?
Review your credit report and clear off any misunderstandings about it. Then, set a plan to fix things. There may have a few items there that you can dispute.
You may discover a debt you don’t remember having or a foreclosure that happened over 7 years ago. According to Federal Laws, late payments, charge-offs, and foreclosures can only stay for 7 years on your credit report.
If you have doubts on some items, file a dispute with a credit reporting agency. Your credit score may improve if there are mistakes in the report.
If there are none, you can take actions now to boost your score. You may set up payment due date alerts and use the calendar to make sure your payments are on time.
You can use a credit score simulator that can predict your new score based on certain scenarios. You will see how your future actions will affect your score in a positive or negative way.
Think you can pay off $3,000 worth of debt in 3 months? Input that number in the calculator and you’ll see how much your score will have improved.
Making big credit card purchases or requesting credit, on the other hand, can cause a drop in your score. Some lenders can perform “soft” credit checks that will not affect your credit score.
Requesting a secured credit card can also help in improving your score. Make sure you make on-time payments, and this will reflect on your report.
Explore Your Options
Having bad credit isn’t the end of your education. You only have to know your options.
Have you considered a Federal Student Loan? This doesn’t require you to have a good credit score. Submit a form and prove that you are in need of financial assistance. That’s it.
The good thing about this is that you can defer payments until you graduate and get work. The interest is also fixed subsidized.
There’s a limit on how you can take out each year, however. And that depends on what assistance you qualify for. There are also certain criteria you have to meet before you can request.
If you qualify or not, you will need to resort to other sources such as private lenders, especially those that can offer you student loans with poor credit.
These are more lenient on the requirements. And you don’t have to prove that you’re in dire need, but that you can pay off the loan.
Search for Lenders Who Offer Student Loans with Poor Credit
You may still be eligible for some student loans with poor credit. The usual private lender also requires a decent credit score. But, some institutions won’t look at your credit history.
Rather, their basic requirements are proof of identity, proof of income, and a bank account. You may also need a collateral depending on the lender.
Lenders that don’t perform credit checks only look at your income and your potential to pay off the loan. Your past mistakes won’t matter. Of course, you must stick with your payment schedule.
They will also require you to have a bank account. This is important because you will pay off the loan in installment by allowing them to debit from your account.
Different lenders have different terms, so you still have to do your research. You can compare the rates, repayment term, and installment size before you make a decision.
You can also use websites that can connect you with various lenders. You’ll have to provide information once, then the service will do the request for you. This allows you to contact several lenders in one easy step.
This is a great way to get student loans with poor credit. The request form for bad credit student loans is straightforward, and the releasing of money is fast, too.
Find a Creditworthy Co-Signer
You may or may not also need a co-signer depending on the company. In a typical scenario, a borrower must have a co-signer if they have no credit history or a bad credit score.
Your co-signer must have good credit! The better the score, the better the terms. If you’re looking for lower interest rates, this could solve your problem.
However, you have to find a co-signer. They are the ones who will pay off the loan should you ditch that responsibility. In other words, they are at risk of shouldering debt they didn’t incur.
Your parents or other family members who trust you can be good starting points. You can also ask your friends if they are willing to guarantee that you’re a good payer.
You can see why this process can be hard, especially if you’re surrounded by people who have bad credits as well. All it takes is one person who believes in you to get a student loan so you can pursue your education.
Don’t Use a Credit Card or Personal Loan
If you already have a credit card, using it for your education may make sense to you. Except, it doesn’t.
A credit card or personal loan doesn’t have the same features as most private student loans. You may end up with more debt than you would have.
These also put you at risk of incurring higher interest rates. A cash advance from a credit card has a fee and has higher interest. Whereas a personal loan may offer special considerations like deferred payments.
There’s a reason why there are different types of loans after all. So you choose the one that can best suit your needs.
Avoid Student Loan Scams
Student loan scams prey on those who would like to get their student debt off their shoulders.
Called “student debt relief,” the program promises to settle or lower your loan. This sounds good, but if they’re offering it to you for a fee, then it’s a scam.
You can spot them by asking if they’re associated with the Department of Education. If they’re honest, they’ll say no.
Also keep in mind that what they’re offering to do for you, you can do for free. If they insist otherwise, it’s time to walk out.
Legit loan forgiveness programs won’t charge you an upfront fee or monthly payments.
You can go straight to the government if you want to have your loan settled or deferred. If your student loans are from a private lender, you can talk to them as well.
There’s no reason to further damage your credit.
Let Us Help You Search for Available Student Loans with Poor Credit
We can help you search for the best student loan for you. We can connect you with lenders that offer what you need.
You can search and compare rates and terms, then determine which one is right for you. We’ll ask for your basic information, which we’ll forward to various financial providers.
Some will pre-qualify you for student loans with poor credit. Once they do, you can then finish your request with the lender. We do the work for you, so the process is fast and easy!
Contact us now for inquiries!