I have $60,000 in various student loans, but since consolidating my combined payment is only $300/month. I have no other debt. Do lenders view student loan debt differently due to the flexibility of the loans? Also, would they look more at the total amount of the debt or the monthly payment when determining the rate and loan amount?

With 20 years experience in the mortgage business, I have never seen a student loan that was in repayment treated any differently than any other long term debt. While you may be able to ask for a hardship deferal in the future, which is the only advantage on a student loan that doesn't exist on a standard installment loan, no lender wants to anticipate that circumstance. As long as the payments extend past 10 months in the future, the lender will only use your monthly payment as part of your qualifying ratios. The total debt is not that important and would only be a minor factor. What will matter more is your payment history on the student loan: it should be perfect. It all comes down to the quality of your credit history (your FICO score) and your qualifying ratios of debt/income.

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Credit Report Seasoned Trade Line

A credit report seasoned trade line is a method of allowing strangers with bad credit to become authorized users on a credit card account of someone with good credit for a fee. This is also known as piggybacking and can be very helpful to people who have bad credit and fear they will never be able to have good credit. Of course, there is some controversy to the credit report seasoned trade line business.

The benefit to the person with bad credit will have an account with excellent credit history listed on their credit report which will raise their credit score. The cost of a credit report seasoned trade line will run anywhere from $500 to $2,000 depending on the credit history of the new account. The person with the good credit receives from $100 to $150 for this with the rest of the money going to the middle man that set up the seasoned trade line in the first place.

Of course, there is a risk for the person with good credit. The person with bad credit may charge the credit card account and then not pay it back thus causing damage to the good credit person. The brokers who provide the service claim that they never provide the entire account number to the recipient, however they may find it out anyway because the entire number may appear on some credit reports.

A logical question that comes about when exploring a credit report seasoned trade line is whether or not it is legal. The FTC says that what they have been advised about from their lawyers is that it appears to be technically legal. The agency, however, is not saying that it is legal. The credit report seasoned trade line practice could be fraudulent if, as required by the contract, a borrower does not disclose pertinent facts relating to that person’s ability to pay back a loan.

Fair Isaac Company who is the inventor of the FICO score which is your credit rating says they will no longer take into account authorized users when determining a credit score. That means that a credit report seasoned trade line practice may become obsolete.

This is a double edged sword since it will stop the practice of seasoned trade lines appearing on credit report; however it will negatively affect students who use their parent’s cards and spouses with little credit history of their own. A seasoned trade line can help a person with bad credit show good credit on their credit report, but it may not be legal and we think it won’t even be available in the future anyway.

As of this writing, Seasoned Trade Lines are no longer in practice.

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Car Loans for People with Bad Credit

Even people with very bad credit can get a car loan.  Have you seen the commercial with the guy wanting to buy a nice SUV and rolls out with a used  econo-box car? It really isn’t that bad. Wondering if people with very bad credit have options when it comes to getting a car loan? Well, they do!  There are many different ways you can go about obtaining a car loan even if you do have very bad credit.

One of the best options you can have is with a car dealer who specializes in making car loans to people with very bad credit.  They usually advertise with slogans like “Everyone approved” or “No one turned away”.  Most of these companies are reputable and serious about getting you into a new for you car. On a side note, before you do buy from one of these companies, check with your local Better Business Bureau to see if there are any unresolved complaints against them. This is for your protection.

Most dealerships like these carry older model cars with higher mileage, but they are often good cars and can at least get you on the road even with very bad credit.  The way they work is that you apply for a car loan and they usually finance the loan themselves.  Your interest rate will be high and you will make your payments directly to them.  Your car is your collateral so if you don’t make the payments, the car will be repossessed.

When buying from one of these dealerships, remember that not only do you need a car, but you are trying to re-establish your credit. Make sure to ask them if they report your loan and payment history to any of the  three credit reporting agencies.  If they don’t, do not buy from them! If your loan in good standing is not visible to these reporting agencies, then it would be a waste of your money in higher interest payments because you would only be accomplishing 1/2 of your goal.  If they do, Make sure you are on time and consistent with your payments.

People with very bad credit should probably look to these companies first for a car loan rather than try to go with a bank or a finance company.  These dealerships specialize in situations such as these and there’s no story they haven’t heard.  That means that no matter how you got into the situation with your credit, they don’t care and you can still get a car.

Of course, another option for people with very bad credit is to have a co-signer guarantee the car loan.  You and the co-signer will both own the vehicle.  The loan is made based on their credit history so you’ll want to find someone who has good credit to offset your bad credit.  Then make the payments on a timely basis.  Otherwise, they are liable for the loan and will have to make the payments for you.

People with very bad credit can also look online for car loan companies that specialize in loans just like this.  Often, you can apply right online and get approval within a few minutes.  Be prepared, though.  Your interest rate is probably going to be very high and thus your payments will be very high as well.  Make sure that you will be able to make those payments and look for a vehicle that won’t overextend you and make your credit even worse.

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Bad Credit Private Student Loan

What do you do when you have bad credit and you need to get a student loan through a private company?  It might seem like there’s just no way you’ll be able to get a loan to attend school, but really, there is hope on the horizon.  Just because you have bad credit doesn’t mean there’s no way you can get a private student loan.

You can start by looking into government subsidized loans such as the Stafford Loan.  These are loans that you can obtain through your school and you don’t have to repay them until six months after you graduate.  The interest rate on these loans is usually quite low making it affordable for you to repay after graduation.

Another option for you to look at when trying to find a private student loan when you have bad credit is to have your parents get a PLUS loan.  This will be in their name and will also be at a lower interest rate.  Your bad credit won’t be an issue since the loan approval will be made solely on their credit rating – not yours.  Of course, it will have to be paid back – probably by you, but your parents will be responsible for the payments, so you’ll want to make those payments and not risk the wrath of your parents!

There are also many private student loan companies you can explore when you have bad credit.  Start by contacting your local bank where you have your checking or savings account.  Explain to them your situation and why you have bad credit.  Since you have a relationship with them already, the likelihood of them approving a loan for you is better than if you work with another financial institution that doesn’t know you at all.

You can get a private student loan also by having a co-signer with good credit that will offset your bad credit.  Most often, this is a parent or grandparent.  It works just like any other loan with a co-signer.  They are saying that you will make the payments or they will have to if you fail to follow through on your loan agreement.  Again, it’s important to make timely payments if you have a co-signer on your student loan as missed payments can affect not only your credit, but theirs as well.

Getting an education these days is certainly expensive, but even if you have bad credit, you can get a student loan with a private company.  All you have to do is research your options and then go for it!

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