Options for Poor Credit Student Loans

If you’re looking for a student loan, lenders consider all aspects of your financial history, and you might consider poor credit student loans. Your credit history determines your ability to get student loans, so be aware of your credit and how it affects your college financing. Before you apply for a poor credit student loan, be aware of your other options, and start thinking about improving your credit.

How Poor Credit Affects Student Loans
As with any other type of loan, student loans suffer a number of negative consequences when you’ve got bad credit. A poor credit student loan may mean you’ve got a much higher interest rate, you can’t borrow as much money, or you might not be eligible for a student loan at all. When you need a poor credit student loan, you owe it to yourself to shop around. Don’t be driven by desperation; you might have to look harder to find a decent poor credit student loan, but don’t grab the first offer that comes along because you worry about getting any loan with bad credit.

Apply First for a Federal Student Loan
Most federal student loans don’t require a credit check at all, so exhaust your federal financial aid options before looking around for a private poor credit student loan. Complete the FAFSA and apply for grants or a Stafford Loan. If your parents have bad credit and are ineligible for a PLUS Loan, you may be eligible to receive more financial aid in the form of Stafford Loans. Make sure you leverage all of your federal financial aid options before looking for private lenders when you’ve got bad credit.

Consider a Co-Signer for a Poor Credit Student Loan
Many financial institutions are willing to offer better rates or extend loans to people who otherwise wouldn’t qualify if they can get a co-signer with good credit. If you need a poor credit student loan, ask a parent or other family member if they’re willing to co-sign on a loan. They assume some risk by doing so, as they can be held responsible for repaying the student loan if you default, but, if you can find a co-signer, you’ll find doors opening for student loans. Don’t be surprised if you hear the word no, as many people are understandably wary of taking on this kind of risk.

Apply for a Poor Credit Student Loan, but Consider Refinancing
Many private institutions are willing to defer student loan payments until you graduate from college. If you can find a private lender willing to defer payments on a poor credit student loan, use the time to help rebuild your credit. Establish credit cards in your name, and pay on time. Consider taking out a small personal loan, and repay it as planned. Many financial institutions extend credit to college students, even those with bad credit.

You can use a number of strategies to rebuild your credit, and then you can refinance your student loan at a better interest rate when you graduate college. If you can’t get a completely deferred poor credit student loan, look for a student loan with interest-only payments so you can focus on improving your finances and eventually refinance your student loan.