Student loans are becoming a common fixture in the lives of young people, who are graduating from college with thousands of dollars in debt. As you may know, student loans are not cheap, so many students need to explore other options if they find themselves in a jam. This is especially true if you have a bad credit history, which is not easy to get rid of. If you do have bad credit, you may benefit from one of these student loans, depending on timing, credit history, and other factors.
The costs of college have increased dramatically in the past few decades, as have the costs of student loans. Anyone who is planning to attend college should investigate options to alleviate their student debt and make sure they are making the right decisions when compared to other options.
If you’re hoping to pursue higher education but have been turned down for a student loan, it’s likely because you have bad credit. And with no credit history, it’s hard to obtain a good student loan rate. But these loans are out there, and we’ll explain to you which ones you should consider in the future.
If you need student loans but have a poor credit history, you may be wondering if you can get a student loan. The good news is that most federal student loans do not require a credit check, with the only exception being Direct PLUS Loans for graduate students. But if you need more money to pay for your studies after you’ve used all the federal loans and federal student aid like grants and scholarships, private student loans may be your next option. Financial institutions that offer private student loans require credit checks and may have minimum credit score requirements, so if you have a poor credit score, it may be difficult to get approved. If you are looking for student loans for a bad credit history and need options, here is what you need to know.
Try to get a co-borrower
As with any other type of loan, a poor credit history presents some problems when you need additional funding for your education. If you want to apply for a private student loan with an unfavorable credit history, you will need a co-borrower to be approved. Most private lenders already require a co-borrower. According to the Consumer Financial Protection Bureau, 90% of personal loans have a co-borrower. A co-borrower is the person legally liable for the loan. In many cases, fellow borrowers use their good credit score to help the main borrower (i.e. you) get a loan. But if you don’t pay, the repayment of the loan falls on the shoulders of the co-borrower.
Given the legal nature of signing a loan, it is very important to find someone who is comfortable with this arrangement. In general, the co-borrower is a family member or spouse. From the beginning, make sure you both understand equally who is responsible for the loan so as not to jeopardize your relationship. A fellow borrower with a good credit score – 700 or higher – can increase your chances of getting a private student loan. If you have a co-signer and are looking for student loans for bad credit, you can start your search here:
- LendKey connects borrowers with local banks and financial institutions that offer the best terms. With a co-borrower, you can take advantage of competitive and lower interest rates, increasing your chances of approval.
- CommonBond also offers private student loans and has a guaranteed release after two years of repayment. So if you apply with a co-borrower, you can waive it later if you show that you are a responsible borrower.
- Citizens Bank offers private student loans, and an application with a co-borrower can help you get approved. Citizens Bank offers a deposit waiver after 36 payments.
- Credit unions can offer private student loans to borrowers with bad credit if you have a guarantor. Explore options in your area with ASmarterChoice.org.
What to do if you do not have a guarantor
It can be difficult to find a co-borrower. In effect, you are asking someone to take legal responsibility for your loans, which is no small task for one person. If you can’t find a co-borrower, don’t give up hope. Some private student loans with no guarantor are available to you even if you have a bad credit rating. Here are some loan providers to be wary of:
- Ascent offers student loans, but does not necessarily require a co-borrower. According to Ascent’s website, several factors are taken into account, including credit score, school, program, graduation date, major, cost of tuition and other factors that may allow students to get a loan in their name without a guarantor.
- MPOWER financing offers student loans to international students without a guarantor. This way you can see if you qualify.
If you check both options, you may have a better chance of being approved for a loan if you don’t have a co-borrower.
Student loan application for poor credit history
If you have a bad credit history and need a private student loan, be careful where you apply. Check the eligibility requirements and see if there are any specific credit score requirements. They may have higher interest rates (floating or fixed APR) and costs. Review repayment options and potential benefits such as deferred payment and repayment plans. Private loans do not qualify for debt relief and are difficult to repay in the event of bankruptcy.
If you are unsure whether you can get a loan, consider applying to several lenders in a short period of time (about two weeks). This short time frame can contribute to your statements only counting as a hard inquiry on your credit report. Repeated credit history checks can be a red flag to lenders and cause a slight drop in your credit score, so keep them to a minimum. Be careful when choosing your strategy for applying for a loan, especially if you already have a poor credit score.
Tips to improve your credit score
Applying for a student loan with a bad credit history can be stressful if you need financing but aren’t sure if your application will be accepted. To improve your credit rating, make sure you make all your payments on time. If you have a credit card, keep your balance no higher than 30% of your credit limit. Additionally, if you limit the number of new credit applications and adopt a positive and consistent borrowing behavior, you can improve your credit situation.
As your credit rating improves, consider refinancing your student loans to get a better interest rate on your student loans. Whatever your situation, when it comes to private student loans and bad credit history, there are many student loan options and different student loan providers to choose from. You are not doomed to have a bad credit history forever, and you may be able to get better terms when you refinance. Refinance your student loan and receive a bonus in 2021.
Frequently Asked Questions
What will happen to student loans in 2021?
The U.S. Department of Education predicts that by 2021, the average student loan borrower will owe over $53,000 in loans, and these loans will have a cumulative balance of nearly $1 trillion. As you can imagine, this can have major impacts on the overall economy as well as many borrowers’ personal wealth and economic security. Student loans have become a huge part of the American student life, and they are likely to get even bigger.
According to a new report from Sallie Mae, 2.8 million student loan borrowers defaulted on their loans in 2017. That’s up from 2.4 million in 2016, and the first time that the number of borrowers that defaulted has risen in the last five years. The report found that a growing number of borrowers are struggling to make payments. In 2017, 3.7 percent of all borrowers defaulted on their loans. That’s up from 3.1 percent in 2016.
What is the easiest student loan to get approved for?
The feds have your best interest at heart, which is why they work hard to make sure you complete your student loan application, but they don’t want to make it too easy for you. They have designed student loan programs to go out to thousands of borrowers across the country to make sure their loans are paid off in a timely manner and that you don’t default, but that also means it can be tricky to make it through the process. In the first part of this article, we discuss the top student loans for poor credit.
This article is for people who have a better credit score than the 7% FICO score limit, and who are looking for ways to get quickly approved for a student loan. In this article, we discuss the top student loans for someone with good credit score. After you read this part, you should have an idea of the best loans for you to get approved for quickly.
Does Sallie Mae approve bad credit?
It is common knowledge that student loans can be a financial burden. In fact, the U.S. student loan program is the largest in the world, with nearly half of all borrowers owing money on their student loans. So, what are your options for student loans for bad credit? According to research conducted by the FDIC, they are limited to government programs and private student loans. If you are looking for an alternative to the federal student loan program, Sallie Mae offers private student loans with low interest rates and flexible repayment plans.
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