Why Can’t I Get Approved For a Private Loan?
Ever since the credit crisis hit the student loan industry, it’s gotten harder to get private loan funds. Let’s face it – credit is tight these days. That means that banks are being much more selective in their lending decisions. Without any significant credit or income of their own, college students can experience some difficulty in getting private loans.
If you are in need of private loan funds for college, make sure you know what lenders are looking for in deciding whether to make a private loan to a student:
-
Your Credit
Although you probably don’t have much of a credit history, lenders will always check your credit record to make sure you don’t have any student loan defaults, credit defaults, or serious delinquencies (like on your credit card, for example).
-
Your School
Believe it or not, your school now has an impact on your ability to get a private loan. If your school has a high graduation rate, lenders believe you are more likely to graduate and find a good job, and therefore more likely to be able to pay back your loan. If you are finding that lenders do not work with your school, you need to check with your financial aid office to see if they can point you to a private loan lender who does.
-
Your Co-signer
Perhaps the most important factor in the equation is your co-signer. Lenders are looking for someone to share responsibility for the loan with you, should you not qualify for the loan on your own. That could be a parent, relative or friend who has a good credit history and documentable income. If you are having trouble finding someone to co-sign the loan for you, read our section on Finding a Co-signer.
If you are have applied for a private loan, but were denied due to your co-signer’s credit record, you can always find another co-signer and try again. We know it’s difficult to find someone that wants to have your student loans on their credit report. If a private loan really is your only option, read up on the best ways to approach someone to become your co-signer.
Your school is a great place to start if you are looking for a private loan lender. If you are having difficulty getting approved for a private loan, make sure to keep your financial aid counselor updated. If you can’t get approved for a private loan, you’re going to need to find other options to pay your school bill. Don’t wait to discuss any problems with your financial aid department!