Many adults these days are returning to college and want to get a student loan, but they have bad credit. This is a vicious cycle, with one thing perpetuating another. First, these folks never started and/or finished college, so they were stuck with a low-paying job that required them to take out loans just to get by. Then, of course, they couldn't keep up with their loans because of their low wages, resulting in a poor credit scores. The good news for these folks is that student loans use different criteria than most loans and this works to their advantage.
Loans Are Deffered
First you need to understand that payments on student loans are deferred as long as you are attending college. It is because of this that lenders often feel less risk in giving loans to people with bad credit. Lenders are willing to bet that you will get a high-paying job that will enable you to pay off your student loan after you graduate from college. This fact may allow you to get a student loan much easier than you would any other loan. You may have a higher APR (annual percentage rate) on your student loan because you are considered a high-risk borrower, but at least you will get the loan. Also, the loan is deferred, so you don't have to worry about it right away.
Is No Credit Bad Credit?
You also want to think about whom receives most student loans, i.e. new college students. The average eighteen-year-old probably doesn't have great credit and shouldn't be able to get a loan. Actually, most new college students have no credit whatsoever because their parents have paid for everything. No credit is not necessarily bad credit, but sometimes it is considered just as bad because there is no record of what kind of risk this person carries financially. Once again, lenders are willing to gamble that this eighteen-year-old with no credit is going to graduate from college and get a high-paying job that will enable them to pay off their student loans.
Avoid Shifty Lenders
One thing that you need to steer clear of if you have bad credit and are looking for a student loan is the shifty lenders, many of which you'll only hear about through banner ads on various websites or through the spam email that we all despise yet receive on a daily basis. If you have been repeatedly denied by others and are truly desperate, you can think about one of these loans, but make sure you thoroughly investigate it before you sign on the dotted line. You may also want to get an accountant or someone who is more financially knowledgeable than you to check out the loan. Some of these loans are full of confusing jargon that simply gets you mired in a bad loan.
At the end of the day, don't give up all hope if you have bad credit but want a student loan; there is a light at the end of the tunnel. You have many options available if you want a student loan but have bad credit, you just have to know where to look.
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