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Budgeting / Credit
What is a credit bureau?
Credit Bureaus maintain a history on people that borrow money. A credit history
tracks the way you have handled credit in the past, and how you are managing it
now. It is used by potential creditors and lenders to determine your ability to
pay debt. Your student loan payment history also becomes part of your credit
history. Making regular payments builds good credit and will help you qualify
for loans, obtain credit, and secure lower interest rates for future purchases
like a car or home.
Do I have to have good credit to get a student loan?
Federal student loans such as the
Federal
Stafford
Loan and Federal Consolidation Loan do not require a credit check.
However, if you are a parent or graduate student applying for a Federal PLUS
Loan, or Graduate PLUS Loan, you do have to meet minimal federal credit
guidelines.
What if I have bad credit? Will I still be able to get a Stafford Loan?
A negative credit history does not affect a student's ability to get a federal
student loan. However, private/alternative loans commonly used to supplement
financial aid packages may have credit requirements that could prevent you from
qualifying.
What are the credit requirements for Federal PLUS, Graduate PLUS, and Federal Stafford Loans?
Federal Stafford Loans
do not require a credit check, but PLUS Loans do. When you apply for
a Federal PLUS Loan, or Graduate PLUS Loan, your lender obtains a credit report from
a national credit bureau as required by federal law. Each lender must follow the federal credit requirements. However, some lenders requirements could be more stringent. Contact your lender for their requirements. These include: debts more than 90 days past due; evidence within
the past 5 years of bankruptcy, default, repossession, tax lien,
wage garnishment or write-off of a Title-IV student loan debt.
Is it important to have a budget?
Yes, budgeting is important for properly maintaining your finances. You can
start by knowing that a student loan is a debt that must be repaid and it
accrues interest. Also, remember that Since you have a choice in repayment
options, by creating a budget you'll have a clearer picture of how large a
payment you can afford. When you first graduate and earn an entry-level salary,
a lower payment may be your best option. Later when your income increases, a
higher payment may be more comfortable.
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