Alternative Student Loans Credit Info

So many students are searching the internet for “bad credit student loans” that we decided to dedicate a section of our website to understanding credit and whether or not “bad credit student loans” exist today.

What does it mean when lenders say I don’t have enough credit history or income?

Each lender creates borrower criteria to determine who can qualify for an alternative student loan and at what price point. The reality is that as an undergraduate, you may have some modest income, or none at all. In addition, you also probably have a “thin credit file,” meaning that you simply don’t have a history of debt obligations, payments and charges. Without income or credit history, lenders will require someone who is credit-worthy to co-sign the loan with you.

Are there any alternative student loans for bad credit?

While we don’t know the credit criteria for each lender’s alternative student loan product, the basic fact is that your chance of approval is fairly low if you or your co-signer have bad credit. When people refer to “bad credit” they are likely referring to having a low FICO score. Lenders may also take into account other items they feel increase the risk that you won’t pay back the loan, including late payments, judgments, charge-offs, bankruptcy, and previous student loan defaults. Given today’s financial environment, you can expect that bad credit student loans will be difficult to find.

How can I tell if my co-signer has good or bad credit?

When you ask someone to be your co-signer, chances are you won’t know whether they have good or bad credit, and you may not know what their level of income is either. Both credit and income are usually considered fairly private information, and your co-signer may not want to disclose this information to you.

Before you apply for alternative student loans with your co-signer, ask if he/she can meet the following list of basic criteria:

• A good credit history with more than 18 months of borrowing, charging and repayment with few or no late payments on your credit report
• No excessive delinquencies, judgments, accounts that have been charged off or bankruptcies that were pending, filed or discharged in the past two years
• No prior student loan defaults
• Be a U.S. citizen and 18 years or older
• Verifiable income (the amount will vary by lender)

What if I want to review my credit information before I apply?

It’s always a good idea to understand your personal credit situation. You can get a free copy of your credit report by visiting www.annualcreditreport.com.

As an undergraduate student, how can I build credit and why is it a good idea?

Building good credit will help you to become a desirable candidate and save money in interest and finance charges throughout your lifetime. People with good credit tend to be offered the best terms and products available, often at lower rates (examples include mortgages, car loans, credit cards, student loans).

You can build credit at your own pace, based on your own income and spending habits. As you earn income and make purchases, you will begin to build your credit. Paying monthly bills that are in your name on-time is one way to build credit. If you use a credit card, make sure you charge and pay your bill responsibly. If you have student loans, paying some of the interest payments while in school will help you build your credit. One thing you want to make sure NOT to do is to let your debt get out of control. Too much debt for your level of income (debt to equity ratio) can lead to a lower credit score.