Creditworthiness and Student Loans
If you are considering student loans and have bad credit, or no credit, it is important to remember that you do have options. First, make sure you have submitted a FAFSA application, and applied for all the grants and scholarships you can find, to minimize the amount you will need to borrow as much as possible. After that, the Stafford student loans offered through by the federal government do not require a credit check. These loans are guaranteed by agencies working with the government and lender banks. So unless you have recently declared bankruptcy, chances are you will not be denied these loans based on your financial history.
Where creditworthiness really comes in to play is when applying for additional loans on top of any Stafford loans you may be offered. Parent PLUS loans, also offered through a federal program, require sufficient credit history on the part of the student’s parent who applies for the loan. Students who apply for alternative student loans with banks or other independent institutions will also need good credit to qualify. Different lenders will have their own terms and conditions for the loans they offer, and many are willing to accept cosigners for students whose credit isn’t up to par. Other loans offered through federal, state, or institutional programs may or may not include a favorable credit score as a requirement. So, be sure to speak to your financial aid adviser about these, and get the facts about credit requirements for any loan before you decide whether or not to apply.
Categories: Student Loans