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Can You Get an Educational Loan with Bad Credit?

Stay Eligible for Educational Loan with Bad Credit

Bad credit will push you back in serving different needs of the life. You are no longer in the good books of the lenders which keep you away from getting a loan when needed. Do you have to stay away from availing the educational loan as well? Most of the lenders are not interested in offering study loan for the people with bad credit. There is no need for you to sail on the same boat. Trying for an educational loan is always a better option than travelling with the myth that you are not eligible for the loan. However, you should make all the effort to improve the chances of availing the loan before approaching the lender seeking approval.

 Credit check

 Most of the lending institutions today offer the education loan based on the credit score. Your credit score is analysed by the lender based on your payment history, types of debts you have, an amount that is yet to be paid and much more. All these factors are likely to impact your credit score. Before you approach the lender seeking approval of the loan, you should make an effort to improve your credit score in the major areas. Try paying down your large debts at the earliest and continue this for a year to build a strong credit score that makes you eligible to apply for the education loan.

Options available

Nationalised banks are reluctant to offer you the study loan when you have a poor credit score. Understand that building credit score does not happen overnight. You have to wait for a substantial time making regular payments for your debts.  If you don’t have the leisure to wait for a such a long time to avail student loan, you can consider approaching private lending institutions who offer educational loan at higher interest rates even when you have little less credit score. You can even try explaining the reasons behind your poor credit score, few lenders may consider approving the loan when they are convinced that there is no risk of defaulting the loan.

Assurance

Your chances of fetching education loan even with the bad credit increases when you can assure the lender about repaying the educational loan. You can give this assurance to the lender through different options.

Co-singer

Student loan lender demand assurance from the borrower when the student loan amount exceeds more than 4 lakhs in the case of bad credit.  You can easily borrow credit score from the co- signer and improve the chances of getting the loan. Student loans benefit the students with the grace period. The loan is charged with the minimal interest rate during this period and the borrower is liable to repay the loan only after a year of completing the education. Once you graduate, you can easily refinance the loan and remove co-signer.

Secured loan

Secured loans carry a low rate of interest over the unsecured loans. If you can back up the education loan with the help of the security that has higher value, you will stand a good chance to get a loan with bad credit.

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