To qualify for credit-based educational loans, such as a Federal Direct Graduate PLUS loan, students (and in some cases, their co-signer) must be credit worthy and meet minimum credit requirements. If you think you may need to borrow from a credit-based loan program, we strongly encourage you to review the status of your credit history well before applying for loans.
You have a credit history if you have any of the following: At least one credit card, any consumer loan (such as an auto loan), student loans (federal or private), or any other form of personal credit (such as a cell phone contract).
Creditors use this information to determine whether they should extend credit to you based on your "willingness to repay the loan" as demonstrated by your past credit performance. Some factors used to calculate your credit score can include:
- Promptness in paying bills
- Number of credit cards
- Total credit limit
- Amount owed on accounts
Although it is often a concern for student borrowers, having multiple student loans and/or a large amount of education debt does not necessarily mean you will have a poor credit score. Your past management of credit is more important.
How can you check your credit report?
You are entitled to three free credit reports every 12 months; one from each of the three major credit bureaus. To access your free credit report online, go to www.annualcreditreport.com. For federal student loan purposes, it isn't necessary to purchase your credit score.
Your credit report will contain information such as: current balances, types of debt, payment performance, available credit, and a record of credit inquiries within the past two years.
Some negative credit information may remain on your credit report for up to 7 years; bankruptcy can remain for 10 years and student loan default remains on your report for 7 years. Review your credit report to ensure that accurate information has been reported. Errors can occur, or worse, you may find fraudulent activity on your credit report if you have been a victim of identity theft.