Bad or No Credit Score: Here is How to Get a Student Loan
If you're looking to finance your secondary education, finding a loan that suits your credit rating can be daunting if you have bad or no credit. A high credit score is crucial to being approved for any loan, including education loans.
International students are not able to receive federal student loans unless they're eligible non-citizens. Still, they can qualify for private student loans, undergraduate student loans, and other private loans for students.
Your credit score will play a significant role in the type of student loan you qualify for as well as interest rate, approval time, and the amount of the loan.
For students who are residents or citizens of India, CIBIL (Credit Information Bureau (India) Limited) is the country's first credit information company and provides credit information and scores for students seeking private and federal education loans.
What is CIBIL?
CIBIL is India's first credit reporting company. All financial institutions and banks must send all monthly credit card and loan histories of individuals to CIBIL, where the credit information is collected, and a credit score is created.
What is CIBIL Credit Score?
Similar to credit reporting agencies here in the United States, CIBIL credit scores value between 300 and 900. Your score is based on information from your CIR or credit information report. Your score will be used by lenders during the loan evaluation process and is a direct indicator of your creditworthiness.
How is the CIBIL Score Calculated?
Your CIBIL credit score will depend on six months or more of financial data history and your CIR report. An algorithm will calculate your score from 258 different variables.
Some of the information that affects your CIBIL score include repayment history, credit utilization limit, how long any credit accounts have been open, the amount you pay each month, and a credit mix of unsecured and secured credit accounts.
How Does CIBIL Score Affect Your Education Loan?
A CIBIL score plays a critical role in an education loan. Seven hundred fifty and above is the ideal CIBIL score for getting an education loan. Scores of 600 and lower will make getting a loan more difficult.
Ninety percent of approved loans are granted to students with scores of 750 or higher. The higher your score, the better your chances of being approved for an education loan.
How Can You Improve Your CIBIL Score?
A low CIBIL credit score doesn't necessarily mean you have to give up your secondary or undergraduate education dreams. There are other ways to qualify for education and undergraduate student loans, including a private no cosigner student loan.
According to the experts at Ascent Funding, "International graduate students have the option to apply for a Cosigned Credit-Based Loan." With an approved and creditworthy cosigner, you can be approved for a private loan to meet your education goals.
You can also take steps to improve your CIBIL credit score. While this may take time, it's definitely worth the effort.
Also, keep in mind that getting approved for an education loan with a low CIBIL credit score may be difficult, but it's not impossible. Resolve errors in your credit report, pay current bills on time, and showcase your proof of income to demonstrate to lenders that you can pay bills on time and have the ability to repay the loan.
An excellent CIBIL credit rating is vital to get approved for a student loan and setting the stage for you to meet your higher education goals. If you currently have a low credit score, take steps to improve your score before applying for an education loan or consider finding a worthy cosigner to cosign an education loan.