Many students fear that they won’t get a student loan or a good rate with a student loan because they have little or no credit and it is a valid question. I am going to take a look at a few different types of loans and some things you can do to improve your credit.

Stafford Loans

There are no credit checks done for a Stafford Loan when subsidized or not. You are limited in how much they can give you based on your age and circumstance. If you are a freshman you can get $3,500, Sophomores $4,500, any other year $5,500. If you are over 24, or married, serving for the military, or if your parents are struggling with their own finances and credit then an additional $4,000 could be offered.

Perkins Loans

This is where the worse your situation is the better you are. They will look at your credit, your financial income, your parents financial situation, and anything else that can give them a good idea if you are struggling or not. I suggest that you go to your financial aid office to find out information on what they can offer you, but it could be up to $4,000 to help you to get going.

PLUS Loans (Parent loans for Undergraduate Students)

This is something that your parents are going to be checked and not you. This could very well cover the remaining portion of your tuition or other school funds to help you move through your education without having that responsibility on your shoulder.

School Certified Private Loans

This is an example of where your credit will matter. You are going to need to have a minimum of a 620 FICO score to get the student loan for the entire process. Otherwise I would look for a parent or a trust friend or family member that is willing to trust you with their credit.

Direct to Consumer Private Loans

So many people look for loans like this because not only is tuition taken care of but funds are sent directly to the student so you decide how the funds are spent on room and board, food, school supplies, dates, etc. Many schools also give direct loans to students, but whether it is private or federal student loans, you are probably going to want to make sure you are in the 700′s when it comes to your credit. This shows you are responsible, so don’t screw it up. This also may be a good example where you should be extra kind to mom and dad to get some co-signing help.

How To Improve Your Credit

Some of you may have some time before you have to worry about this or there may be some parents out there that want to help their kids out by making sure their credit is good enough that they don’t have to co-sign. One of the best things that you can do is get a credit card and use it wisely. Make normal purchases on it that you can easily pay off with your own funds. Make sure you never miss a payment. Set up an automatic payment system.

The next thing you can do is make sure that you get a checking account and start paying some bills like a cell phone bill or rent or whatever. This may take a few months or maybe a year, but it is worth it and you are going to buy stuff anyways. It might as well be noticed by national credit bureaus. If you can make sure to make even multiple monthly payments to help your credit score improve. You would be surprised what it does if you make weekly and bi-weekly payments.

There is a lot of hope out there that you can get some fancy scholarship for sports, arts, academic success and if you do then that is amazing and super, but for many of you the only option is to have to pay tuition with a federal or private student loan to help you afford school. You are probably paying four to five figures for tuition this semester and that can be a lot of pressure, especially if you are not in a good financial situation. If that is the only option don’t feel bad, you are fitting right in with most of American college students.

Get Organized

Make sure that you start off by getting organized and collecting all of your documentation and even discussion topics with your lender or financial aide. This may seem tedious, but then you know exactly what you agreed to and how to stay in touch with your creditors. These documents are taken for granted and you will forget a lot of how it is set up four years down the road when you are probably going to be initially responsible for paying back your loan, maybe sooner. Life changes and you want to be prepared especially if there are not fixed interest rates and you really don’t know what other bills you may have four years from now.

Every Student Loan Document and Discussion Counts

Save yourself time and spend a little money to buy student loan computer software to be on the ball with payments, due dates, interest rates. So many of these programs can set up repayment programs for you to follow to help you out. Spend you time in college on the books, not worrying about bookkeeping for a student loan.

If you are looking to just save money then use folders or envelopes to organize all of your information. You don’t want to get confused on whom you owe and what your payments and interest rates are. Make sure to keep up-to-date addresses and telephone numbers of your lender to keep in touch for any questions. Also keep copies of all written communication between you and your lender or the financial aid office of the school that you are lending from. Many have learned from experience how valuable it is to save all applications, disbursements and disclosure of statements, applications and loan transfer notices.

When you store this information make sure to stay up to date with it. Set up an automatic payment plan so you can have payments taken out of a checking account without the possibility of you forgetting about a the next loan payment. This loan could be your responsibility for up to 30 years. Do you realize how many payments that requires from you monthly? Unfortunately many debtors don’t have the money, but just forget a payment and that can seriously destroy credit.

Get Help Recording Your Student Loan

If you are struggling keeping this information together then feel free for you to go to an accountant to help put this together properly. If that seems difficult then even a family member that you trust with financial situations is a viable source. Find someone that you know is intelligent with how to pay loans, balance documents, and know how to use borrowed funds correctly. Creative spending can help you save a lot of money on interest by possibly cutting your repayment plan in half. A student loan can be a daunting task to take care of; don’t be afraid to approach a trusted family member, friend, or a financial adviser for some much needed help.