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Student Loans for Parents with Bad Credit Can Be Found, But May Be Unnecessary

As a parent with bad credit, trying to help your children get money for college can be frustrating. Student loans for parents with bad credit can be hard to come by, but there are ways you can help. There are some loans you can get even with bad credit as well as other financial alternatives.

Most likely you’ve already explored your options with federal loans and financial aid along with your student son or daughter. If you are in financial difficulties, your student may benefit. Check if he or she is eligible for financial aid or need-based scholarships or subsidized loans. The best starting point in gathering education funds is the Stafford loan. This does not have any credit requirement, so get this loan and any subsidized loans you can first, then see how much you’ll need to borrow from private lenders.

You may be eligible to cosign for your children’s student loans even with bad credit, especially if you have a steady employment record to counterbalance credit problems. Offering to cosign your son or daughter’s student loans can help despite your bad credit because lenders will see that you are backing up your student and may offer lower interest rates and fees.

There are many lenders and you are unlikely to receive a flat refusal unless your credit and debt is exceptionally bad. They will compete for the privilege of giving you a student loan for your son or daughter’s education; as filing for bankruptcy will not expunge student loan debts, it is a safe and lucrative investment for lenders.

If your student plans on attending graduate school, you can take advantage of their years as undergraduates to start building up your credit score. Parents can apply for a federal PLUS loan for graduate students with minimal credit requirements. If you help your student son or daughter with their life expenses, textbooks, and supplies, do it with a credit card and pay your card on time. This way you can help them with their studies and, at the same time, increase your credit rating so you can help more in the future.

Another way to increase your credit rating is taking out a collateral loan and paying it back faithfully. You can mortgage a house or car, or apply for a home equity loan to help pay your student’s education costs.

With some work, student loans for parents with bad credit can be obtained, and barring student loans, there are other methods of helping your children get an education.

Student Loans for People With Bad Credit

There are ways of getting student loans for people with bad credit but if you’re looking for a student loan and you have bad credit, you should consider a few strategies for improving your credit rating.

If you understand how the credit rating system works, you will be better positioned to apply for a student loan so this is how your credit score is created.

First of all, you won’t get a bad credit rating just because you needed credit, but your score will reflect the timeliness of your repayments. Just one payment reaching the lender late can adversely affect your rating. Basically your credit score is an accumulation of all the results of your previous loans.

Once a year you are entitled to a free copy of your credit report from each of the three credit rating agencies, Experien, Transunion and Equifax so if you have had credit in the past, it’s well worth applying for these reports to ensure that they are accurate. If they are not accurate then you can challenge the inaccuracies but unfortunately, even if you have diligently paid back all your loans on time, you will not necessarily get a good credit rating because your score will also be based on your having taken out a variety of different loans over time.

If you are going straight from high school to college, you won’t have a long or diverse borrowing history and as a consequence will almost certainly have a relatively poor credit score.

So now that you understand why you have a poor credit score, let’s look at a couple of ways of getting student loans for people with bad credit.

Firstly, you can try to find yourself a cosigner with a good credit rating. A cosigner is someone who will sign your loan agreement along with you and will effectively be your guarantor. The first place to look for a cosigner is at home so try asking your parents or guardians to help you out. This is quite a big thing to ask someone to do because if you are late with your payments or default altogether, your cosigner will be liable for the remainder of the payments although normally, after a number of on time payments the cosigner will be released from the agreement.

If your parents can’t or won’t be your cosigner you can apply for a Federal Student Loan which without a good credit score is about your only option. Complete a Free Application for Federal Student Aid (FAFSA) which takes into account your own income and that of your family against what you need to cover your college tuition fees, accommodation and other essentials and calculates how much you need to borrow.

Once your application is made you may find yourself eligible for a Stafford Loan which, depending on your circumstances, may have the interest payments subsidised by the Government.

If you are in serious financial straits then you may be entitled to a Perkins Loan which has a higher annual maximum than a Stafford Loan and for which you won’t have to start repayments until 9 months after you have graduated from college.