How Credit Affects Loans
How Does Credit Affect my Loans?
Many students use the Grad PLUS or private education loans to fill the gap between the actual cost of attending graduate or professional school, minus the amount of federal aid you are receiving. Therefore it is extremely important to maintain a good credit history so that you can borrow the Grad PLUS or private educational loans you may need for a portion of your graduate or professional school costs. The information in your credit report may have a substantial impact on your eligibility to obtain Grad PLUS or private alternative loans.
Before you apply for the Grad PLUS or private alternative loan it would be wise to request your credit report from one of the national credit agencies. It is important to know what your credit says about you, there may be adverse or negative information that may or may not be correct so it is important to know what your credit says prior to applying for a loan.
What Kind of Credit Do I Need?
NOTE: Graduate and Professional Student PLUS loans do not use any kind of a debt-to-income ration or FICO score, unlike private education loans.
If you are not approved for a Grad PLUS or private alternative loan you will need to get a co-signer. A co-signer agrees to the responsibilities of a credit application with you, which basically means they take on the liability for your debts. Your co-signer must be a US citizen or permanent resident and credit worthy.
NOTE: The consequences however for not being able to obtain the Grad PLUS loan or private alternative loan on your own or with a co-signer could impact your ability to have the funds necessary for living expenses, as your Direct Unsubsidized loan(s) does not cover your entire budget amount.
