When you have poor credit, your options are somewhat limited as far as loans are concerned. Most people who have checked their credit report and attempted to repair their credit before they apply for a new loan, but sometimes you don’t have the time or the financial resources to do so. If you are applying for a personal loan, student loan or a home loan with poor credit, the process can be much more difficult than it would having a good credit score. But life isn’t always on schedule and you may need to acquire a loan unexpectedly, and even though your poor credit may weigh you down, it won’t sink you to the bottom.
Personal loans and home loans are heavily influenced by poor credit, but student loans are much different. There are three basic types of student loans that are available for a current student in today’s market, and each one has their own conditions:
Government Funded Student Loans: For the majority of students, the most common loan is a Stafford loan. The lender is either a bank or the government itself, and the student is the borrower. Most students enter college in their late teens and have no, little or poor credit, and a Stafford loan is available to all of those scenarios. A Stafford student loan is available to almost anyone entering secondary education, and a Perkins loan is quite similar. The only difference is the school is the lender and the government provides the money. Your poor credit has no influence on receiving a Perkins loan either, but if you have defaulted on either student loan you will not be eligible for another one until you resolve the issues.
Government Funded Student Loans for Parents: If the Stafford loan amount doesn’t fulfill the students financial needs, their parents can take out a loan as well. A Parent Loan for Undergraduate Students, or PLUS loan, has the same characteristics as a Stafford, except for one detail. The lender will glance over the parents’ credit report for any signs of poor credit, but the approval rate for a PLUS student loan is as high as a Stafford. The reason for the high acceptance rate is the government wants to open doors for students seeking higher education, not limit the access for those wanting to better themselves.
Private Student Loans: For students at a more expensive school or enrolled in graduate school, Stafford or Perkins student loans may not cover the load. In this case, they need to take out a loan from a private lender; unfortunately, their poor credit will affect them just as if they were taking out a personal loan or a home loan. A private student loan is similar to any type of personal loan; the use of the loan for school purposes doesn’t matter to them, they’re more concerned about your poor credit. However, your projected salary upon graduation can heavily influence their decision, so if you’re planning to make an excellent living after graduation your chances will greatly improve. As with any poor credit loan, your interest rates will be higher than average, but in the case of continuing your education and reaching your goals, sacrifices must be made along the way.
