What is a credit bureau?
Credit Bureaus maintain a history on
people that borrow money. A credit history tracks the way you have handled
credit in the past, and how you are managing it now. It is used by potential
creditors and lenders to determine your ability to pay debt. Your student loan
payment history also becomes part of your credit history. Making regular
payments builds good credit and will help you qualify for loans, obtain credit,
and secure lower interest rates for future purchases like a car or
home.
Do I have to have good credit to get a student loan?
Federal student loans such as the Federal Stafford Loan and Federal
Consolidation Loan do not require a credit check. However, if you are a parent
applying for a Federal PLUS Loan, you do have to meet minimal credit
guidelines.
What if I have bad credit? Will I still be able to get a
student loan?
A negative credit history does not affect a student's
ability to get a federal student loan. However, private/alternative loans
commonly used to supplement financial aid packages may have credit requirements
that could prevent you from qualifying.
What are the credit
requirements for Federal PLUS and Federal Stafford Loans?
Federal
Stafford Loans do not require a credit check, but PLUS Loans do. When you apply
for a Federal PLUS Loan, Goal Financial obtains a credit report from a national
credit bureau as required by federal law. Although PLUS Loan credit requirements
are minimal, a few adverse credit items could make you initially ineligible.
These include: debts more than 90 days past due; evidence within the past 5
years of bankruptcy, default, foreclosure, repossession, tax lien, wage
garnishment or write-off of a Title-IV student loan debt.
Is it
important to have a budget?
Yes, budgeting is important for properly
maintaining your finances. You can start by knowing that a student loan is a
debt that must be repaid and it accrues interest. Also, remember that Since you
have a choice in repayment options, by creating a budget you'll have a clearer
picture of how large a payment you can afford. When you first graduate and earn
an entry-level salary, a lower payment may be your best option. Later when your
income increases, a higher payment may be more comfortable.
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