How to Get Financial Aid When You’re a Student with Bad Credit
College is more expensive than ever. According to the College Board, the average student at a private university paid just more than $40,000 in the 2013-14 school year for tuition, room and board and other college expenses.
Very few people can afford to pay this all out of pocket. As a result, most students need some sort of financial aid to help pay for their education.
If you have a bad credit score, it’s understandable that you’d be worried about how it will affect your financial aid chances. A bad credit score will impact some types of financial aid but not others.
There are a few steps you can follow to increase your chances of getting the money you need to pay for your degree.
1. Apply for federal financial aid first
There are two ways to get financial aid for college: through the federal government and through private lenders.
Turning to the government first makes sense, especially if you have bad credit. The government doesn’t consider your credit score for these loans. It just looks at your need.
To get federal financial aid, you need to apply through the FAFSA program. After you apply, the federal government will look at your financial situation and let you know if you qualify for any of its loans.
Another reason to look here first is government loans have lower interest rates than private loans.
2. Apply for the smallest amount of private financial aid
While federal financial aid helps, it might not be enough for all your costs. Many students find they need more money for living expenses.
At this point, you could turn to a private lender like a bank. These lenders have stricter standards and do consider your credit score.
To give yourself the best chance of qualifying, apply for the smallest amount you can the first time through. Lenders are more likely to approve a small loan than a big one.
If you handle the payments on this small loan responsibly, it will help your credit score and make your lender more willing to give you money for future years of school.
A bad credit score shouldn’t get in the way of a college degree.
If financial aid isn’t enough, you could take out a personal loan as well — but only if you can manage the payments responsibly.
3. Get help from a cosigner
If your score isn’t high enough to qualify for private financial aid, perhaps you can get help from a close friend or family member.
You can increase your chances of getting financial aid by getting a cosigner on the application. When you have a cosigner, this other person backs up your loan with his or her credit score, which makes it more likely you’ll be approved.
Just be sure to always pay back a cosigned loan on time because missing payments will hurt the cosigner’s credit score along with your own.
Not sure what your credit score is? Check today.
4. Improve your credit score
As you go through school, it’s important to keep improving your credit score. Be sure to make all your minimum payments on time for both your financial aid and other loans.
If you currently have outstanding debts, try to pay them down as much as possible. This will also help your score. This work will make it easier to get financial aid in the future as well as loans when you’re done school.
If your credit score is really bad, you might want to contact a credit repair firm.
A bad credit score shouldn’t get in the way of your dream of a college degree. Use this advice to get the money you need to graduate.
In the future, be sure to keep good credit habits so you’ll graduate with both a degree and a good credit score.
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