by Samuel

Created on: October 20, 2008

Not all student loans require credit check. Since Federal Student aids are handled by the US Department of Education to help qualified students finance their higher education, most of them don't require credit check from the loan applicant.

Credit check is mostly experienced by students who apply for private loans. While some private loans require no student credit check but a co-signer (US citizen/resident with good credit history) for the student before they are obtained, others will not approve loans for students with bad credit history.

CREDIT SCORE: HOW IS YOUR CREDIT BAD?

FICO (Fair Isaac Corporation) Score is the most used credit score to judge one's credit history to know if he has a bad or good credit. FICO score sums up and scores one's credit history into a numerical figure. With scores ranging from 300 to 850, some lending institutions may find it difficult granting loans to students with credit scores below 650.

A credit score far below 650 (60%) is therefore referred to as bad credit. Most private loan lending institutions use the FICO score and other methods to check student's credit ability. This helps them measure the borrower's payment ability.

And sometimes the interest rate given to you will depend on your credit score. The higher the credit score, the lower the interest rate.

LOANS WITHOUT CREDIT CHECK

Most Federal Student Aids require no credit check. PLUS Loans is probably the only Federal Student Aid that won't grant loans to a student with a very bad credit history. They normally would grant loans to students without high credit scores, but when the credit score shows a very bad and unfavorable credit history, they may refuse to grant the loan.

Some private loans require no credit check. You will also need a co-signer with a good credit history to process your application.

HOW TO IMPROVE CREDIT SCORE

A bad credit score can always be improved. It takes time, commitment, and patience.

Do pay your bills on time. If you are indebted to multiple loans, you can consider consolidating them so that you can concentrate on just one loan; otherwise pay good attention to the loans with higher interest rate.

You will need to start using a prepaid debit card instead of a credit card. Finally, do not secure loans you know you will be unable to pay within the stipulated period.

SOURCES / FURTHER READING

http://www.finaid.org/loans/creditscores.phtm l

http://en.wikipedia.org/wiki/Fico_score

http://en.wi kipedia.org/wiki/Credit_score

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