How to Strengthen Your Student Loan Application
By Rachel Seitz
When you take out a student loan, you’re looking for resources to improve your life: further education, more competitiveness in the job market, a step toward reaching that dream career you’ve had on your mind since you were eleven years old. On average, 1.4 million people take out private student loans each year in the hopes that they too will have access to financing to help them reach their goals. Unfortunately, not everyone is able to qualify for a loan upon first application. But at Climb Credit, we want everyone to be able to hone their applications, so they may re-apply with different results. While there are no guarantees, here are some ways you can strengthen your student loan application and increase the possibility of approval.
Add a Co-Borrower
If you don’t initially qualify for a Climb loan, we don’t say “we’re sorry, but you can’t receive financing from us.” Instead, we ask you to reapply with a co-borrower: someone who signs onto the loan with you and agrees to pay if you're unable. For all Climb loans, if the Co-Borrower is fully qualifying, so is the Borrower, regardless of credit history or income. Thus, applying with a co-borrower greatly increases your chances of approval—and even increases the chance of a lower interest rate. Be sure, however, that both parties are fully aware of what is expected from a co-borrower and what cosigning a student loan entails.
Check Your Credit Report
Maybe you weren’t approved for a student loan but are sure you have a good credit history. In that case, we encourage you to review your credit report. You’re entitled to one free credit report per year, and can access yours at annualcreditreport.com. Once you have a report, take a look to see if there are any errors. If you do see a mistake on the report which is adversely affecting your credit, reach out to the credit bureau to have the mistake corrected. When the error is fixed, you can then reapply with a stronger credit history—not to mention numerous other impacts the strength of your credit score can have.
Include All Sources of Your Individual Income
Income is another factor that lenders often look at when underwriting an application. It may be that, when entering this information, you typed in income from your day job but didn’t include other sources of income you receive, such as freelance work. By going back and making sure you’ve represented all of your income, you’ll give the lender a clearer picture of your financial situation, which they can take into account when processing your application. If you do this, make sure you have income documents (e.g. pay stubs or tax documents) to support what you claim on the application.
Research Multiple Lenders
When it comes to student loans, every lender has different criteria they use for approval. Simply because one institution doesn’t offer you financing doesn’t mean everyone else is a lost cause. Look at all of the options available and what their approval criteria are; you may find that your profile qualifies you for one company’s loan product even though you weren’t approved by a different company. And even if you did qualify for a loan upon your initial application, it’s still in your best interest to shop around; there may be another lender out there who can offer a lower interest rate or better term length. Doing your research ensures you receive the best possible offer for your student loan.
Although there’s no magic formula that guarantees every single applicant receives a student loan, following the steps above will strengthen your application and could give it the boost it needs to get you that approval offer. Additionally, your school’s admissions office and the lender’s customer service center is available for any advice, assistance, and information you need to help you complete a successful application. Good luck!