Do You Need Good Credit to Get a Student Loan?

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If you are applying for a Stafford loan you do not have to worry about your credit. They do not base the decision on your credit at all. However, there are strict criteria to qualify for a Stafford loan and other loans that do not require a credit check. Even if you do qualify they will almost never cover all your college expenses.

Therefore, credit scores will play a factor in paying for your education. As parents and students try to get additional financing they will find that good scores on their credit go a long way.

If you have bad credit that does not mean that no one will ever lend you money. But chances are that it will be more difficult for you to obtain a loan and you are almost guaranteed to pay more for it.

So what does good credit mean for you? It means getting the best loan with the best terms and the lowest rate. So you do you know what your credit standing is?

Your FICO score is one of the first things that will be looked at before you are extended credit by anyone. Since that score is so important you need to know how it is determined. There is a formula that is not publicized, but there are enough variables that we do know.

Some of these variables are the amount of actual debt that you have and the amount of potential debt you have. There is also the matter of paying bills late. The later you pay your bills the more it affects your FICO scores. All these variables and others are not considered equally but they are all considered.

Parents want to be very careful with their credit because any problems they have with their credit will reflect badly on their children. The truth is that most students have not had time to establish credit so lenders must base their decisions on the parents' credit.

Really the best scenario is if both parents and students have good credit rating. A bad credit rating for either one can negatively affect the process of getting a student loan. It is important to maintain an FICO score of at least 650. If your scores are lower than that you will have to work harder for a loan and possibly pay more for it.

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Source by WM Blake