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.