By Melissa Kellet
Student Loans and Bad Credit
Do you have no credit history at all? If you are a student in need of funding, you should consider the options regarding student loans for those with bad credit – both government and private.
Students Facing the Odious Credit Check
As with all banking credit instruments, student loans require a credit check. That includes some student loans for those with bad credit. At least that is the way it is with private student loans. The granting of these loans depends on the creditworthiness of the applicant. Credit histories are based on the reliability of loan payments and how well these loans were seen through to maturity. Payments for everything from your cell phone to a pay day loan can be counted. Bad credit histories are a result of making payments late, missing payments, or even forgetting about paying loans entirely.
Bad-Credit Histories and No-Credit Histories
Bad-credit histories show a bank that extending credit would incur a high risk to the institution. However, what can signal a private lending institution of risk as well, is no credit history at all. Such is the case for most young adults as they are preparing to enter an institution of higher education. These folks just have not yet had sufficient time to build a credit history, good or bad. Yet, they are often in dire need of financing to avail themselves of an education. If you find yourself in this circumstance, what do you do? Among other things, avail yourself of a student loan for those with bad credit.
Student Loan Options
Students in this predicament have a couple of courses. They can endeavor to get a federal student loan like the Stafford Loan. If the student can show severe hardship financially, they may qualify for a Perkins loan. Of all federal student loans for those with bad credit, it has the lowest interest rate. For any federal student loan, there is no credit history check to worry about. Thus, having no credit history at all, or if a student did manage to already stake a poor credit history, neither will affect the chances of being awarded such a student loan.
Another Option
If neither of these student loans for those with bad credit is realistically available to a college bound student, he or she might want to consider seeking the help of a cosigner. This individual would have to have decent long-term employment as well as a good credit record. Many students turn to their parents or another older person who might be interested in their future. The cosigner must be aware that should the student default on the loan for any reason, or at any time, even years later, the cosigner is legally bound to step in and assume responsibility for the loan. If they do not, the cosigner faces the prospects of a very bad credit history themselves and probably even being taken to court.
Do Not Give Up: Beyond Student Loans for Those with Bad Credit
Students who are not born with a silver spoon in their mouths should be persistent in their search for financial aid. Look to grants, scholarships, or community funds that may be available. Something is bound to turn up. Be sure to fill out a Free Application for Federal Student Aid (FAFSA) at the school financial aid office and ask counselors there for more assistance in getting student loans for those with bad credit. Students should also look to work-study programs that various colleges or universities offer. Something is bound to turn up and no student who seeks a higher education will ultimately be deprived of one.
More Loans Than One
Over the course of an education, students may find themselves taking out federal as well as private student loans for those with bad credit. And that on top of grants and scholarships. Be aware that this is something that may come up and discuss the possibilities and probabilities with your folks or other significant mentors. Consider that you may need them for a consolidation loan later on.
