It can be a difficult condition to get refused for a private student loan. You’re picking out the furniture of the dorm room one day and getting ready for orientation, and you’re wondering how you’re going even to make it to college the next day.
Don’t panic. There are things that you can do. First, you need to clarify that your student loan application was rejected and what the next moves are.
Why Were You Denied?
Here’s why the Private Student Loans Won’t Work With You. Each lender has its conditions for accepting a student loan. Lenders may take a look at your employment history, credit score, debt-to-income ratio, and enrollment status at your school. One of the most notable reasons that a student does not apply for a private student loan is that they do not follow the FICO Credit Score requirements of their lender.
A three-digit amount that lenders use to calculate how likely you are to repay loans is your FICO Credit Score. This number might not be significant enough to qualify you for a loan if you’ve never borrowed or had to pay back the money before. Your credit score may also have been affected and may influence your chances of getting accepted if you’re no stranger to investing but have delayed or been late on payments.
It can make it hard to get accepted for a private loan with a minimal or less-than-awesome credit background, but there are steps you can take to move forward.
What Can You Do?
- Maximize scholarships, grants, and federal loans.
Make sure you’ve tried every tool to pay for college that’s out there before you even consider a private student loan. Be sure the free money opportunities such as college scholarships and grants have been maximized, and federal loans have been considered. It can be challenging to prepare for college, but some individuals and services can make it simpler for you. Speak to the agent and double-check that you have taken advantage of everything open to you before applying for a private student loan.
- Consider a credit-worthy cosigner.
Ask a credit-worthy individual in your life to apply for a loan for you as a cosigner, someone who signs for you for the loan, if you can’t qualify for a loan on your own. A cosigner with a clear history of work and a good reputation will help to transcend your minimal or low credit history so that you can apply for the loan together.
Often students question their guardians, but you can also ask a guardian or relative to be your cosigner if that’s not a choice. In my situation, the student loan that allowed me to attend college was co-signed by my aunt. Just make sure that you have an open and frank dialogue with your prospective cosigner to ensure that you make a responsible choice.
It is necessary to remember that your cosigner is responsible for your loan fairly, which ensures that if you make a payment, it will harm the reputation of your cosigner as well as your own. You will be allowed to release your cosigner after you have fulfilled certain conditions from your lender, such as making a certain amount of on-time loan payments.
For parents or creditworthy people who wish and are willing to support, there is also another way. They will take out a student loan in their name if they want to take responsibility for paying for half of your education, also called a parent loan.
- Check your credit report.
Reach out to view your credit report at one of the three national credit bureaus. In any of these bureaus, you can review your credit for free once a year to better understand what impacts your ranking. You can develop your credit health in no time by keeping an eye on your credit score and beginning with necessary measures such as making on-time payments and paying off your balances.
Speak to your parents about opening a secured or student credit card for students new to credit and practicing healthy credit practices, such as keeping your balance down and never delaying a payment.
It doesn’t have to be a challenge to find out how you will pay for college. Plan on making or enhancing your loan, and don’t be afraid to ask for support from the people around you. Don’t hesitate to contact the school’s financial assistance office if you’re ever having trouble. They may have other suggestions to help you pay, such as a payment package for tuition that allows you to pay recurrent installments on your tuition bill. Don’t let denial put a damper on your journey to university.