Find out the credit score range for you to be able to get an approval when applying for a student loan.
The student loans just like any other credit or loan are going to affect your credit score. Moreover, the credit score is also going to play a significant role in determining your overall credit limit or the highest amount of student loan that you can get according to your credit score.
If you are able to pay your credit payments on time for the student loan, it is going to affect your overall credit score positively. It shows that you have been able to manage your loan correctly. The payment history accounts for almost 35 % of your overall credit score.
You should have a source of income along with a good credit score to be able to get the student loan. Because deferring student loan payment will negatively affect your credit score.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
Very Good
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
Excellent
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Consolidate Student Loans options based on credit score
Consolidate student loans options based on credit score with the help of these financing companies below.
Different banks can help you consolidate your student loans. There are of course some that require a good credit score, while there are some that don't. Below are some of the banks that can help you with your loans back in college.
Earnest
Earnest is available for graduate and undergraduate students. They don't have any income or credit score requirements. They also offer an unemployment protection wherein you can freeze your monthly payments when you are in between jobs.
Sofi
Sofi offers a consolidation and refinancing for both federal and private student loans. They have different repayment terms of 5, 7, 10, 15, and 20. They also have an unemployment protection and an entrepreneur program, wherein approved applicants can receive mentorship and loan deferrals.