Getting Private Student Loans With Bad Credit

College is costly. If you need to borrow money and you exhaust all of your Financial aid options, you may consider talking to a private student loan lender. however,  having bad credit could refrain  you from qualifying for additional financing. If your credit score isn’t as high as it could be, there are three steps you can take to improve your chances of getting approved for a private student loan

  1. Review Your Credit Report

Your credit score is based on the information included in your credit report. Each of the two major credit bureaus Equifax and TransUnion issue these reports. You may  request and receive one free copy of your credit report from each of these agencies every year.

Prior to application for a private student loan, it is a best idea to review your credit reports. It is  important to make sure and check your payments whether being reported accurately and that there are no accounts listed that don’t belong to you.

In the event that you spot an error, you may have the right to dispute it. All reporting agencies allow you to submit dispute requests online and via mail. If a credit bureau approved your request is valid, it’s required to correct or remove the information in question. That may help you raise your credit score a few points.

  1. Address the Other Issues Affecting Your Credit

If there aren’t any mistakes on your credit report, something else may be dragging down your credit score. If you can’t figure out why your score is low, it’s a good idea to look at your payment history.

According to the FICO your payments account for 35% of your score,  this is the credit scoring model most lenders use. Do you always pay your bills on time? Even just a  single late payment can dramatically affect your score. When you need a private student loan, it’s important to make on-time payments.

You  may also need to consider the amount on your available credit you’re using. Maxing out your credit cards could bring down your score. Making monthly payments for your credit card debt and keeping your credit utilization ratio under 30% could help improve your  poor credit score.

  1. Consider Getting a Co-Signer

If you have bad credit, student loan is one of your best options. Finding a co-signer may help you qualify for a private student loan in Canada. Your co-signer could be your parent, spouse or another family member, or a trusted friend. But generally, it should be someone with a high credit rating. Always to keep in mind that a co-signer assumes responsibility for a loan in case of default. If you can’t keep up with your personal loan repayment options, your co-signer’s credit score could fall. If you default on your loan amount, your lender could sue both of you since you and co signer are the one’s responsible for the loan.

If your family member  seems reluctant about being your co-signer, a lender may agree to release him or her after a certain period of time.The best example, if you make on-time payments for the first two years, your lender may remove your co-signer’s responsibility from the loan.

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