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Can You Get a Student Loan With Bad Credit?

If you want a student loan, but bad credit is hindering your success, it is essential to consider a few things about student loans for bad credit. As students always look for better loan facilities that can help them achieve their life goals without a lack of funds posing as obstacles. While searching for a student loan, many forget that their bad credit score can complicate things. So, if you find yourself in a similar situation, what would you do? Is it possible to get a student loan for bad credit? If yes, how would you get rid of this bad credit score? Well, there are innumerable options out there that could help you in this matter. There is a high possibility you might want to delve into this topic more. So, here we are highlighting a few ways to help you apply for a student loan with bad credit.

Federal Student Loans- A Great Option

Experts say if you have bad credit, a federal student loan can be the right option. The best part about federal loans is that they don’t require any credit check, which gives one more reason to choose this option over the others.

There are four primary types of federal student loans, and they all come from the Department of Education:

Direct Subsidized Loans

Direct subsidized loans are considered perfect for undergraduate students with financial constraints. In such federal loans, there is no need for a credit check. Not only this, but in such loans, the government pays the interest for a certain period of the loan. Such a loan might be your best option to get a Student Loan for Bad Credit.

Direct Unsubsidized Loans:

Next on our list are unsubsidized loans available for graduate, undergraduate, and professional students. You will have to pay interest for an extended loan period when you acquire such loans. There is no need for the government to pay interest that mostly happens in subsidized loans in such a loan option. When you say yes to unsubsidized loans, no credit check is performed.

Direct PLUS Loans

This PLUS loan is available for graduate, undergraduate, and professional students. Among different federal loan types, PLUS loans are the only loan that requires a credit check. People with bad credit can get such loans, but the interest rate will be typically higher than other types of federal loans.

Direct Consolidated Loans

When you apply for a direct consolidated loan, there will be no need for a credit check. This type of loan provides complete ease for borrowers to combine all their federal student loans into a single loan to simplify the payments and lower the monthly minimum. But at the same time, consolidated loans have different drawbacks.

So, now you’re aware of different types of federal student loans, you might be want to proceed further and apply for federal student loans. But there are many more things you can look at; one of them is private student loans for bad credit.

Can You Get Private Student Loans for Bad Credit?

Your CIBIL score or credit score matters a lot when it comes to student loans. So, if you want to get a student loan for bad credit or no credit, sometimes, the need arises for private lenders’ cosigners. A cosigner is basically responsible for the loan you’re unable to pay. The better this cosigner’s credit score will be, the better the interest rate or other loan terms will be.

But at the same time, it is crucial to understand that if you make late or miss payments together, it could hurt your credit and cosigner credit score. (acc. to the Consumer Financial Protection Bureaus.) So, we suggest you talk to an expert to get extra help in such private or other student loans.

How Federal and Private Loans Different From Each Other?

According to CFPB (Consumer Financial Protection Bureaus), federal loans are the ideal option you can consider first as it helps you enjoy lower interest rates than private loans. Not only this but federal loan interest rates are fixed for the entire loan period. On the other hand, the story is a little different in the case of private loans. The private loan interest rate may vary and can change. On top of that, federal interest rates are decided earlier without considering your credit score. Even you can enjoy more options when it comes to paying off federal student loans that include assistance with interest, income-based repayment plans, deferred payments, debt consolidation options, and loan forgiveness.

So, this is all about federal and private student loans and how they are different from each other. It will help you understand which option is ideal for you.

But at the same time, many people usually ask ways to improve your credit score before applying. Sometimes, students look for better ideas that can make the score difference. Therefore, we have come up with a few ideas that you can try to improve your credit before you apply. Doing so might help you get a student loan for bad credit.

Ways to Improve Your Credit Before You Apply

Whether you’re applying for a student loan or any other type of loan, a good credit score is a must. And if you’re worried about how to build good credit before applying for a student loan, thankfully, there are a few ways you can try.

Pay off Debt: If you have too much debt that affects your credit score, you must be aware that it is causing a major impact on your credit standing. That debt may include credit cards, car loans, etc. Understandably, it is hard to pay off your previous debt when you’re already in need of a student loan. However, making small payments is better than entirely missing them. So start paying off in small portions, what you can.

Make On-Time Payments: Late payments, as well as missed payments, harm your credit score. So, if you have a history of late payments in your credit score, it will hurt your credit score and distance you from any financial benefits. Thus, you have to make sure not to miss any future repayments.

Keep credit utilization low:  Your credit utilization ratio depicts how much credit you’re using and how much credit you have. The Consumer Financial Protection Bureaus say keep the credit utilization below 30 percent. This way, you will have access to emergency funds if ever needed, and won’t even have to pay the whole limit of your credit card.

Become an Authorized User: An authorized user is a cardholder who has been granted access to use their credit card account. If card activity is reported, using credit responsibly as an authorized user can help build or improve your credit. Being an authorized user can also help you establish credit if you don’t have a credit history yet. But keep in mind if that account is not used responsibly by the cardholder or the authorized user, that will reflect negatively on both.

Building credit takes time. These are just a few ways you can start to improve your credit. However, it is not possible for every individual to stay on top of all their payments and make sure that they are carefully planning their finances as required. Thus, you can instead make use of professional services through a reliable credit repair agency like Active Credit.

Active Credit is one of the best credit repair companies you can find online. So what are you waiting for? Get in touch with them today to improve your credit score and find out what are your options for student loans for bad credit.



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