Getting Student Loans With Bad Credit: What To Do
Going to college requires money. You might be tempted to get student loans with bad credit if your score isn't so good. But you should at least know what to look for and what the risks are.
Often students and parents hear a few rumors about tuition and books, or other costs, and they go nuts. Suddenly the world is coming to an end. Maybe not.
1. Make sure you have applied for federal financial aid (fill out a FAFSA).
2. Get a job and earn as much toward tuition as you can.
3. Apply for as many scholarships and grants as you qualify for, and keep looking for more.
These three should always be the first things you try. On to loans.
Running Out of Money
When you run out of money for college, you have a problem. If your Pell grant and Stafford loan (did you apply?) doesn't cover your expenses, you might start looking for a private loan. Perhaps you hard about the Astrive program, or saw a Citibank student loan ad.
These private loans offer fewer of the benefits of a federal loan. You may pay higher interest, especially if you have bad credit.
The interest rate you pay depends on your credit score and other factors when you apply. If your credit is too low, your bank might require a cosigner. In that case, your rate will depend on both of your scores. The credit score is a measure of trust for the lender.
When it is too low, your bank may decide giving you a loan will risk their money too much.
Student loans with bad credit also may not have the same deferment rules. Or, you may have to pay a higher rate or capitalize the interest (which means you pay interest on interest).
Be sure you know what your loan includes.
Avoid Payday Loans
You will need to avoid some loans. For instance, payday loans or postdated check loans. You end up paying huge amounts of interest on these, with no deferment benefits.
Besides, when payday comes, how will you pay the loan? If you don't have the money today, what will change between now and then? Don't mess with these.
Car title loans are similar. The company will off far less than your car value, and charge a high interest rate. Stay away from these expensive loans.
Stay Away from Scammers
Also, you can get scammed for looking for bad credit student loans. Don't specifically tell everyone you have a bad score. Apply and see if you qualify. If you don't ask why or how you can be approved.
Apply to real banks. You don't want to get taken for an application fee because you applied over the internet to a bogus company.
Finishing Your Degree