In recent years, there has been a great deal of information directed at young people about how to avoid racking up credit card debt and other kinds of debt before you hit the working world.
This is truly sage advice, although if you’re thinking about heading into undergraduate, graduate or professional school, you may have no credit history with which your creditworthiness can be judged!
The good news is, if you have no credit, you don’t have bad credit, and that can be a better foundation for applying to loan programs.
So not to worry; there are options for students who lack credit history!
Make Federal student loans your first target. In fact, most financial aid advisors who are really doing their jobs will probably steer you this way first. Filling out a FAFSA (free application for student aid) is the easiest way to blanket the federal government with your request for all kinds of loans that don't check your credit history.
Stafford Loans, both unsubsidized and subsidized, are based on your financial needs and are the most common types of student loans. They do not require a credit history or check. The issue with Stafford Loans is that they are fairly low amounts; it’s probably that a Stafford Loan would have to be paired up with other types of aid to cover all a student’s expenses, if that’s what he or she needs.
The Federal Perkins Loan is awarded to potential students who have great need. A Perkins Loans typically runs $1,000 to $4,000 annually, and are a combination of government funds and those from the institution to which you are applying. Again, the Perkins does not require a credit check.
Be sure to examine your state government’s website, and contact the central office for education. Many states offer a lot of student loans that are designed to attract future professionals and teachers to work in underserved areas or fields of specialty. Someone thinking of going into the teaching field might find a less stringent loan in return for a few years of service in an underprivileged school.
The same is true for private organizations. For example, nurses are currently in short supply and to make it more attractive for people to enter medical science programs, they might offer competitively rated loans which do not require a credit check.
Alternative loans are another option for students who lack credit history. Some government (state and federal) agencies offer career-training loans, which have competitive rates and offer financial relief for those seeking distance learning, a return to the workforce training or trade school tuition.
Last, a co-signor is a way to obtain a loan if you have less than stellar or no credit history. Many students ask their parents to co-sign for them, but if your parents’ credit is bad or for some other reason you can’t ask, don’t even think about it. The key is to find someone who you trust – and who trusts you – and has the best credit out all the candidates you can approach.
Of course, once you obtain a student loan, don’t forget that repayment is a huge factor when it comes to calculating your credit history! So even if you didn’t have a history when you applied for the loan, how you pay it off can impact your credit for a very long time!