Student Loan Options Exist Despite the Specter of Bad Credit

It might seem that students, more than any other group, should have the hardest time when it comes to getting loans. This is because they are famed for having no money, but the fact is that the vast majority of students do work to get through college. What is more, their prospects are usually good, so lenders are open to granting student loans.

The basis of this willingness to lend to people with little money is the idea that a student today is a successful executive tomorrow. So, investing in their education is as much in the interests of the lenders as it is the students borrowing. And so, it is even possible to get loans approved for students with bad credit.

However, the open-mindedness that lenders generally have towards students is limited, and there are criteria and conditions that must be met before they give the green light to loans for students with bad credit. What is more, there is a variety of lending options available to students worth considering.

How Students Get Bad Credit

For most of us, getting a bad credit score is due to some poor money management or some bad luck in the employment stakes. So, how is it possible that bad credit is a factor when lenders consider approving student loans?

Well, credit ratings are designed to show whether a borrower can be trusted to repay their loans or not. The problem is that if we have never taken out a loan before, there is no evidence to suggest we are trustworthy. So, loans approved for students with bad credit often actually mean loans approved for first-time borrowers, who are students.

Alternatively, some students have already spent some time in the big bad world and return to college to enhance their employment and career prospects. So, when they seek loans for students with bad credit, it is because they have some financial baggage with them when re-entering the classroom.

Range of Loan Options

It is always a good idea to seek advice on the student loan options available, especially since there is such a wide range. A college campus is certain to have a financial aid office, where counsellors can fill students in on whether private or public loans are the best way to go.

Public loans are government guaranteed loans that are open to students that require financial aid in paying college fees. They are not open to just anyone, which is why they are amongst the most common loans approved for students with bad credit. The advantage with these is that credit checks are not a factor, though proof that aid is needed is. They also boast very flexible repayment terms.

Private loans, however, are those provided by banks or credit unions and come with no government guarantee. However, often these loans for students with poor credit are available with repayments delayed until after graduation, taking some of the pressure off.

Get a Cosigner

Of course, one of the best ways to secure student loans is to get a cosigner. The reason is quite simply because the lender wants to know that they can trust the borrower to repay the loan. When bad credit is a factor, showing support from a person with a good credit rating helps to convince them it is the case.

So, loans approved for students with poor credit often are done so on the basis that a fully-employed individual has promised to cover the repayments in the case that the student himself is unable to.

These are just a few options for loans for students with bad credit, but your financial aid office can advise on more. Be careful to choose the student loan that suits your situation, and remember delayed repayments does not mean no repayments.

Different FHA Loan Options

The FHA loan is like any other loans, there are different options out there so that they can appeal to many different buyers. When many people think of this type of loan they think of one product and while all of these loans are insured by the Federal Housing Administration, there are some differences in the interest rates as well as in who may qualify for them. The different FHA programs ensure that just about anyone get buy a home today.

FHA Loan Options

The most common type of FHA loan is the fixed rate mortgage, also known as section 203 (b). These loans have the same interest rate and it does not change during the term of the loan. This type of loan insures the lender for the total amount of the mortgage in the case that the buyer defaults and requires a smaller down payment on the loan than a conventional mortgage would typically require. When you get a fixed rate loan of this type you can anticipate having to put down about three percent of the total amount that is being borrowed. Many borrowers like the fixed rate option because it offers them the same interest rate, and therefore the same monthly payment, for the entire term of the loan. With the fixed rate option you can choose between 10, 15, 20, or 30 year terms.

For those that don’t find the fixed rate FHA loan option appealing they may want to look into the adjustable rate mortgages, also known as Section 215. The adjustable rate mortgages or ARM’s are a great deal for those that are looking for a very low interest rate in the beginning. If you are only going to live in the home for a few years this can be a great option because you can take advantage of very low interest rates, which will keep your monthly payment lower than it would be if you had purchased the same house at a fixed interest rate.

The Federal Housing Administration also has a couple of great programs such as the Teacher Next Door and Officer Next Door FHA loan programs. These programs are extended to teachers in the United States as well as police officers. If the home is financed with an FHA loan the teacher or officer is only required to put a $100 down payment on the home and they receive a 50% discount. The program is part of the Housing and Urban Development program and it can help teachers and police officers in many areas of the country to buy a home for the first time, especially because it is known that teachers and law enforcement offers are not all that well paid based on what they do for a living. Not all homes will qualify for this program, only homes that have been acquired by HUD will qualify, but there are some really great houses out there that teachers and police offers can purchase for very little and with very little out of pocket at move in.

As you can see, there are different loan options offered by the FHA so that just about anyone can get into a home and experience the pride of home ownership. If you have always believed that you could not buy a home you may want to look into one of these loan programs. There are many mortgage brokers out there that would love to help you buy a home.

Undergraduate Student Loans: Explore All Available Loan Options

If you are due to be heading off to college soon, you will probably be very interested in what sort of loans you can get to help pay for your tuition, your course materials, and also living expenses like accommodation costs, food, and of course entertainment.

If the combination of money your family has to back you and any grants or scholarships plus whatever you can make from part time work isn’t going to be enough, then luckily there are plenty of student loan options available to help you. However you feel about being in debt, a student loan is an investment in your future, and if it makes the difference between college being an option for you and it not then you are probably going to want to take it.

You usually won’t have to start paying back a student loan until after you graduate and have had a few months to find a full time job, so in essence, unlike other loans people take out, you are taking out the loan based on your future ability to pay it back once you have a college education, rather than your current financial standing.

All federal student loan types can be applied for by undergraduate students (except for Parent PLUS loans, which are for larger sums of money and which your parents or guardians can take out to help you) though the maximum amounts that can be borrowed are lower for undergraduate students than post graduate students.

The most common types of federal undergraduate student loans are the Stafford loan, which is quite easy to qualify for and the most commonly awarded, and the Perkins loan, which has a lower interest rate but is reserved for students who can demonstrate comparable financial need. There is no credit check for these, and a flexible range of repayment plans, as well as options to defer while you are in school or if you fall upon hard times later on.

If you aren’t awarded enough money in federal student loans to see you through, you will need to consider and start comparing private undergraduate student loans. Banks will lend you money to help with your school costs and living expenses, but unlike with the federal loans, these are all subject to a credit check.

As the vast majority of undergraduates are young, they have generally not had a chance to create enough of a credit referencing profile for a bank to be satisfied that they do not present a significant risk to lend to. For this reason, most undergraduate student loans are only granted when the student has a creditworthy cosigner.

Your cosigner takes joint responsibility for you paying back the loan, and as such their being able to pass the credit check on an application with you will be sufficient for the bank to be satisfied enough at the level of risk to award the loan. There are no real options outside of federal funding where you will not either need to pass a credit check or have a cosigner who can, so if you think you will need private student loans then begin talking to your family about the possibility of someone cosigning on your loan.

Life After Bankruptcy – Personal Loan And Unsecured Loan Options – 5 Tips

Contrary to popular opinion, most people do not take declaring bankruptcy lightly. On the contrary, most individuals or couples who end up declaring bankruptcy only do so after months or years of valiantly struggling to get out from under their debt load. In the end, they come to realize that the very best way forward is to essentially get a “do-over” and start things again.

There is no magic formula for knowing when to declare bankruptcy, but a good rule of thumb is to start seriously considering the possibility of doing so when your total unsecured debt (e.g., credit card debt) surpasses an amount equal to your annual income.

However, regardless of when or why you chose to go through this serious – but sometimes necessary – financial step, it does not change the fact that you still may be in need of money. Sometimes, a personal (unsecured) loan may be the best way to get that money.

If you are trying to get on with your life after bankruptcy, personal loan and unsecured loan options await you. Here are 5 tips for getting qualified:

1. Declaring bankruptcy hits your credit score the hardest:

Possibly the worst thing about going through bankruptcy is that your credit score immediately plummets to all-time lows once you do. This can be very hard on your chances of qualifying for a personal loan.

2. A personal loan (or unsecured loan) may be your best option to get access to cash:

Still, if you have few assets and your home (if you own a home) has little equity in it, the best option you may have for getting access to cash is to apply for a personal loan. Also called an unsecured loan, a personal loan requires no collateral to be put up by the borrower at loan signing. The only downside is that your interest rate will be much higher than what you would pay on a secured loan.

3. You are actually more creditworthy now than before your bankruptcy:

As astonishing as it may seem, you are now actually a more creditworthy person than you were before. And, if you think about it, that makes sense: after all, since your unsecured debts like credit card debt have been discharged, you are now in a much better position than you were before to pay down any new loans. Some creditors will recognize that fact and give you a loan, despite you new, much-lower credit score.

4. Pull your credit report now and review it line-by-line:

Before applying for a loan, be sure to request a copy of your credit report and go over it carefully. Be ready to comment to the lender about any positive or negative items on the report.

5. Get access to personal loan lenders and apply to 5 of them:

Now, research online for at least 5 “bad credit personal loan” lenders. Be sure to apply to at least 3-5 of these lenders. It is always a good idea to increase your chances for approval by applying to many different unsecured loan lenders.

Consider these 5 tips as you gain access to personal loan lenders after bankruptcy.