Great Reasons to Use Credit Unions if You Have Bad Credit
Student loans are looked upon as good debt. In other words, since this debt would be used to fund a good cause, a cause that will help to earn money in future, it is considered a good investment. Bad credit affects nearly all types of loans, but not student loans. A student’s credit score does not really matter when it comes to attaining loans.
However, when it comes to applying for students’ loans with no credit are actually at an advantage as compared to those with bad credit. Low credit score could hamper a student’s chance of getting funds. Let this factor not affect your plans of studying further, as there are still other ways of getting funds.
Firstly, low credit rating does not affect the funds offered by scholarships and grants. Moreover, they do not have to be repaid. Your next option should be federal loans. They are offered at low interest rates without checking your credit ratings. Federal loans for bad credit are offered on the basis of family income, current educational qualification and expected date of graduation.
Since private loans are disbursed by private banks having plenty of experience in dealing with lenders, they do not recklessly offer students loans with bad credit. So although leniency is shown towards students with bad credit ratings, rejection cannot be ruled out. Private loans are available for those with bad credit ratings but at an interest rate that is higher than the normal rates.
Those students who have been denied loans on grounds of bad credit will need a co-signer to sign the loan. However, the cosigner needs to be a person with high credit ratings. The co-signer acts like a guarantor for the person taking the loan. It means the concerned individual is willing to repay a part or all of the loan in case the student defaults or discontinues school. The person who agrees to be the co-signer is at serious financial risk, so do expect potential co-signers to turn down your offer. After all there is a difference in having a bad credit score and no credit score. Those with bad credit could default again when it comes to repayment of loan.
Those who cannot find a co-signer will be offered a plus private loan. These are loans created for the student’s parents; parents take the loan on their children. The student repays the loan after completion of the course, instead of pushing of the responsibility on the parents’ shoulders. The advantage is since the parents’ credit is deemed fit for such a loan, the chances of approval is higher.
If nothing seems to work in your favor, don’t give up shop around for private loans for bad credit, be prepared for rejection or to pay higher rate of interests. Think of ways to earn money by taking up a part-time job, requesting your school for some aid or requesting for a lower credit till one semester will help you to pay your fees.
Loans with bad credit cannot be obtained immediately; sometimes it takes multiple tries to get one. However, they are the easiest loans to access.
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