How Does Bad Credit Affect Student Loans?
You studied hard, took the SATs, and received the acceptance letter from the university you want to attend! Applying for student loans to fund your education is the next important step. You might be wondering how your credit score affects the student loan process. Especially if you haven’t established credit yet and are working with a lower score. In this article, we’ll teach you about a few ways you can still move forward with both your credit and student loan process.
The Good News
Even if you happen to have a considerably bad credit score, it won’t necessarily prevent you from getting a student loan. Most undergraduate loan money comes from the federal government. The government does not use credit scores to approve applicants. Even if your FICO credit score has fallen below the acceptable range, you still qualify for federal student loans.
Since federal aid and a bad credit score are not entirely linked, applying for FAFSA (Free Application for Federal Student Aid) is a great option. To receive federal student loans with bad credit, you’ll need to fill out an official FAFSA application. The federal government will get an idea of your financial situation and your family’s. They will calculate how great your need for assistance is to cover the costs of college education. Once your application is processed, you’ll know the type of federal aid for which you qualify. This includes student loans, whether your credit is bad or good.
Parents’ Credit Score
If your parents happen to have a poor credit score and they’re responsible for student loan oversight, things could get tricky. Parents can apply for loans to pay for your college attendance through the Federal PLUS (Parent Loans for Undergraduate Students) program. These PLUS loans are not explicitly based on credit scores, though an adverse credit history of your parent can keep them from being approved for this type of loan.
Did this article help you prepare for the next phase in applying for student loans? Still, have questions? We’d love to hear from you. To learn more on why your credit score may not be going up and other myths about credit score calculation. Check out these articles!
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