When you are interested in going to school in order to enhance your education, the stress of paying for that education can sometimes be more than many people can bear. However, even if you have bad credit, student loans are readily available for your use. In fact, many student loans require no credit check at all and public or government-backed student loans are virtually guaranteed. This article will give you the basic run down of how to get money to pay for your college education, despite your bad credit score.
Bad Credit and Loans
It is a generally recognized fact that trying to obtain a loan with bad credit is nearly an impossible task. Lenders use a person’s credit score in order to assess whether or not that person is reliable as a borrower and judge them based on that number alone. Or so many people think.
However, the process of determining who does and does not receive a loan is much more complicated than simply looking at a credit score. Oftentimes, a creditor will take into account both the circumstances that led to your bad credit as well as the type of loan that you want. In the case of a student loan, the thought is that the increased income you receive as a result of your education will more than compensate for the risk the lender is taking by giving you a loan. Basically, he is relying on your increased income to supplement the loan he offers.
Types of Loans Available
There are two main types of student loans to avail. The first is a government-sponsored loan which requires no credit check. These loans, also called Stafford Loans, are given to a student based on his status as a student only. The other qualifications for a Stafford Loan are really simple. They include:
- Completing a FAFSA form.
- Being a U.S. citizen, a permanent resident or a qualified non-citizen.
- Attending a participating institution at least half time.
- Being current on the repayment of all other student debt.
That’s it. You can be in debt in other areas, such as credit cards or personal loans, but as long as you have no other student loans or are currently repaying the ones you do have, you are all set for a Stafford Loan. There is no credit check required which means that your bad credit score will not have any bearing on your qualification for funds. The only determination that your application will secure is the amount of money you will be eligible to receive and whether or not the interest on that loan will be subsidized or unsubsidized. This determination is based on need alone.
Private Student Loans
You should always look into getting a government-sponsored student loan first since the interest rates on those loans are both low and fixed. However, if you find yourself still needing additional funds for school, private lenders can also help. These lenders will offer additional student loan funds to you based on a number of factors. Though this time credit will come into play, the fact that you are using this money for school will impact a lender’s decision. If you are interested in receiving a private student loan, bad credit is not a barrier. However, do realize that there will be penalties.
Funding Your Education
Overall, funding your college education is possible with student loans. Your bad credit will not matter in many cases, as no credit check is required when applying for federal loans. Also, additional funds can be acquired from private lenders that will take the use of these loans – your education – into account over your bad credit score.