Can I have a Student Loan with a Poor Credit Score?

If you are looking to go to university then you might be looking for a student loan to find the course. However, you may worry if you have a poor credit record that this may affect your chances of being accepted for a loan. However, it is worth learning more about student loans so that you can work out if this will be the case. It will depend on what type of student loan you are eligible to get as they work very differently.

Student Loan
A student loan is usually available for anyone to use for their first degree course. If you have already had a student grant or a student loan like this in the past then you will not be eligible for one. The loan will cover the cost of the course and it will also provide some money towards your living expenses. This part of the loan, which is called the maintenance loan will be means tested depending in the income of the household that you are living in. Your credit rating is not relevant with regards to calculating whether you are eligible for this sort of loan. Also, as the repayments are taken out of the tax code even once you start making the repayments it will not have an impact  on your credit record.

Advanced Learner Loan
An advanced learner loan helps with college or tuition fees in England. The money will be paid directly to the college or training provider and it may not cover the whole cost of the course. Usually you will have to be over 19 and studying levels 3-6 courses which include a-levels and degrees. You can apply for up to 4 loans and use then at the same time – so if you are taking 4 a-levels you can have a loan for each but you can only apply once for a loan for an access to higher education course. You can get three more loans for non-A-level courses. There is no credit check and household income is not a factor. You will repay 9% of your earnings above £25,000 a year and interest is charged at RPI + 3% while studying and RPI and up to 3% afterwards. You have to be over the age of 19.

Postgraduate Student Loan
A postgraduate loan works in a similar way to a student loan as you get enough money to cover the course cost and only repay once the course ends and you are earning enough. It has to be for your first master’s degree and you have to be under the age of 60. It has to a full course so a diploma would normally not be eligible. However, it can be used for a part-time course. It has to be your only funding so if you can get a bursary as well then you cannot get one. You can only borrow £10,609 and this will cover course fees and living expenses you can borrow less but you have to find extra if that is not enough. Repayments start in the April after your course ends and you repay 6% of everything you earn over £21,000. You repay it through your tax code, so it has no impact on your credit score.

Other Loan
If you are not eligible for any of these loans, perhaps because you have used this sort of finance before, you are too old or have not lived in the UK for long enough, then you may consider getting a standard loan instead. Something like a personal loan could help you to get enough money to cover the costs. This is where your credit record will play a part as you will need to go to a standard lender who will use a credit check in order to decide whether you can have the loan. You will also have to start repaying it immediately, not when your course ends so you will need to think about how you will cover the costs of these repayments.

So, you will see that if you go through the route of using an official student loan then you credit record will have no impact on you when you apply. It is not something which will have an impact on your future credit record either, even when you start making repayments. However, if you are not eligible for a student loan or borrow additional money while you are studying then this will. You will have your credit record looked at and the borrowing will appear on it, if it is approved.

This means that anyone who wants to get a student loan should not feel worried about applying if they have a poor credit record. Not only will it have no impact on whether you are likely to be approved for the loan, but it should not make a difference to your repayments. You may worry that if you have had debt problems in the pats that having make loan repayments is a risk. However, these are taken out of your tax code, so your employer takes it out before paying you and so you have no responsibility for repaying it yourself. This therefore means that there is no risk of missing a repayment.

Can I get a Standard Loan with a Poor Credit Score?

If you have a poor credit record then you may worry that you will only be able to get bad credit loans and will not be able to get any standard loans. This may or may not be the case and it will very much depend on the lender and your credit record.

How a credit record works
In the UK a credit record is just a list of items. It is not a score and there is no ranking system. This means that it is up to lender to take a look at the information and make up their own mind about how risky they think you are to lend to. The credit record will show things like regular payments that you make such as utility bills, rent or mortgage and phone contracts. It will also show any missed payments and loans that you have. It will also show your income and if you are employed or self employed. The lender will use this information to work out how much of a risk they think that you are. Some lenders reportedly like to take on borrowers who have missed some repayments in the past as they do not mind them doing this as it means they will get more money due to the fees associated with missed repayments. However, this is not a good excuse for missing a repayment as not all lenders would agree with this and it could cost you a lot of money if you do this. It is also worth knowing that if you apply for a loan and get turned down this will show up on your credit record. This can put off other lenders especially if you have applied for a lot of loans as it can look like you are desperate for money.

How lenders use them
So a lender such as will look at a credit record to decide whether they will lend you money. They will calculate how much of a risk they think you are. If you have no utility bills in your name, pay no rent and have no mobile phone contracts then they may be reluctant to lend to you. This is because there is no evidence that you are able to make regular payments. If you have had a loan in the past and paid it off when required then this could go in your favour as it will show that you are capable of repaying a loan. If you have unpaid debt, records show you have missed debt repayments or bill payments or have any CCJ’s then this will generally go against you.

Each lender will use a slightly different method to calculate your risk and will use different factors to calculate it and therefore this will mean that it is difficult for you to know what you might be able to do to change your credit record. However, you will definitely improve your record if you make sure that you have no outstanding debt. You also need to make sure that there are no mistakes on your credit record as this could cause you to be turned down for loan that you would otherwise have been accepted for.

What loans are available
As lenders look at different things when they are checking your credit record then it means that you may be able to get a standard loan even if you do not think that you have a very good credit record. You may not be able to easily predict what they are looking for and so this could mean that you could be more likely to be accepted than you think. There could be all sorts of loans available to you. The best thing to do is to approach lenders via their customer service department and ask them what chances you have of being accepted for a loan. This is better than applying for the loan right away as if they turn you down it will not look good on your credit record. They may be able to let you know what the chances of them accepting you are before you apply. It is worth being aware that if a lender sees you as a higher risk; because of your credit record, then they might offer you less favourable terms. It is likely that they will charge you more interest than the advertised rate so that they get more money to cover their losses if you default on a repayment.

You may find that it will be easier to borrow small amount of money rather than larger ones as the lender has less to lose so is willing to take on more risk. You may also find that if you have some collateral to put against the loan, such as a house or vehicle that this will help you.