Find Out The Credit Score Requirement For Federal And Private Student Loans
Generally, the necessary credit score before you can get any student loan depends majorly on whether the loan is a private or federal loan. Thus, if you have no credit score or if you have bad scores, there are still options for you. For one, you do not need a credit score if you want to apply for a federal loan. Federal loans for undergraduates do not stipulate that the borrowers need to have a credit history or even a co-signer.
Most people prefer their loans over private loans and that is because they attract lower interest rates. Also, they have repayment of loan forgiveness options that are based on your income. Before you can get the federal student loans, it is required that you satisfy some basic eligibility criteria like citizenship requirements. Submitting the FAFSA is the first step in starting the processing of your federal student loan. It helps you discover different categories of aids such as work-study, scholarships, and grants.
Making the payments on your federal student loan has the possibility of helping you build your credit. However, that score does not appear with 1 out of the 3 credit reporting bureaus till 6 months after you begin the payment. Federal student loans do not require that you have credit history before you can borrow and also offers flexible repayment avenues. However, there are borrowing limits. Thus, to fill in the gap that exists in the costs of college, you may go ahead an take out private loans from banks, online lender or credit union.
You should note that private lender, on the other hand, expects you to have a credit score or have a co-signer. If you have reached the limit of your federal student loans and need to take out a private student loan, then you need to have a credit history before you can qualify. Reportedly, a lot of the private lender’s requirements is that your credit score is good and that would be about 670 or even higher on a scale of 300-850 as used by FICO.
In the alternative, in a case where you have no credit history, then you need to have a co-signer who has a good credit score as well as steady income so you can qualify for a loan. As a co-signer, the person takes responsibility if you cannot repay the loan. Only a handful of lenders do not require that you have a credit history or a co-signer. These lenders consider your earning potential as an alternative to credit history. However, the loans have higher interest rates than federal student loans and also private student loans that are credit based.
Federal Direct Student Loan
A lot of the private lenders’ requirement is that your credit score is 670 or higher. There is the Federal Direct Student Loan, any citizen of the US is eligible and an eligible non-citizen that fills the FAFSA can access the federal direct student loan. The subsidized loans are made available to those students that demonstrate they have one financial need or the other. The loan term is for ten to twenty-five years. The amount can be as high as $31,000 all through the college for undergraduates that get parental support and those who don’t have parental support get a maximum of $57,500. Interest does not accrue for subsidized loans when you are not in school as well as periods of deferment.
Ascent Student Loan
There is also Ascent Student Loan and those eligible are juniors, seniors or even graduate students that don’t have income, co-signer or credit history. To qualify for this loan, you need to be a citizen of the U.S. or be permanently resident there. Also, you must satisfy all the financial requirements. For instance, you must not have defaulted on any other loan.
Also, in the last five years, you must have had no report of bankruptcy. Also. You shouldn’t have collection accounts that are over $100, no judgments, tax liens, unsatisfied repossessions or foreclosures. Also, you may have to satisfy the minimum credit requirements determined by ascent.loan term. The loan term is for ten to fifteen years. The loan amount is between $2,000 and $20,00 all through school. The repayment option is deferred and you can begin to make full payments 6 months after you leave school.
Ascent is distinct because it focuses on credit. It evaluates each application based on different factors such as major, attendance and your earning potential. You are entitled to twenty-four months forbearance in a case where you have issues with making payments.
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