Secure a Student Loan with Bad Credit with These Five Tips

Getting a student loan when you have bad credit is not an impossible task. There are multiple avenues to explore to help you receive funding for your education with or without a poor credit history.

Do You Need a Loan Immediately?

Before venturing down the student loan path, you should consider whether or not you have exhausted your options for grants and scholarships. Use the FAFSA portal to estimate whether or not you are eligible for a PELL grant. Check with your college and local organizations to see if a scholarship is available. By taking advantage of grants and scholarships while they are available, you give yourself time to up your credit score before a loan becomes a necessity.

Apply for Federal Loans First

Through the FAFSA website you can calculate your eligibility for loans offered through the government. These loans have flexible options, lower interest and flexible payment terms. As long as your bad credit history does not include a lack of payment on prior student loans, these services should be exhausted before seeking a private loan.

Begin Rebuilding Your Credit

As soon as you decide to return to the academic world, you must consider your future outside of college and within it. Immediately begin to rebuild your credit by making timely payments on your outstanding debts. If you have any judgments on your credit report, negotiate with the creditors to pay off the debt and have the judgment removed. Pay your utilities on time. Use your existing accounts wisely. Just a few months of working towards paying off your debts, even in small increments, can make a big impact on your credit and show an upward climb on your reports.

Think Collateral

If your bad credit is the result of an unfortunate occurrence or two and you still maintain possessions of some value, avoid the loan-shark esque companies that promise loans no matter your credit history. Instead, try to negotiate a loan with your local bank by offering key valuables as collateral. If you have a vehicle that is paid off, an expensive piece of jewelry or a few appraised antiques, you may be able to raise the money for your education without having to pay an exorbitant interest rate to another type of creditor or a credit card company.

Look for a Cosigner

If your parents or a loved one has a good credit history, ask them to be a cosigner on a loan. Be prepared to offer detailed information relating to why you want to go to school and how you plan to repay the loan despite your credit history.

Student loans are a necessity for many people seeking to obtain higher education, and many options are available for those that do not have a stellar credit history. Be diligent in your search and avoid creditors offering you an "easy-out," to get back into the educational system with a loan that suits not only the creditor, but you.

"Federal Student Aid." StudentAid.gov.