This blog has previously discussed the struggles of younger borrowers, and how student loans often play a large part in their credit histories. When lenders are making loan preparations and trying to determine who is the most creditworthy, comprehensive loan management software is an essential tool. With U.S. consumers trying to deal with everything from student loans and a government shutdown, it is essential that financial institutions are as prepared as possible.
Student loans differ from auto and home loans—and even credit cards—in many ways, but one of the main ones is that borrowers do not necessarily need an established credit history to obtain one.
"The lack of a credit score shouldn't stop you from applying for student loans," Gerri Detweiler, Credit.com's director of consumer education, explained to MSN Money. "As long as you're not in default on another federal student loan, your credit is not a factor in getting approved for federal student loans."
However, the way that a borrower handles his or her repayment plan could affect their likelihood for obtaining any future loans. The news source explained that while many federal loans do not require a credit check, some private options do. Finaid.org reports that potential borrowers who have a FICO score below 650 could have a difficult time getting certain loans.
Financial institutions need to be aware of these issues because it is important to gain as thorough of a picture as possible of any borrower. Credit application software can help pinpoint those who are creditworthy and the right loan management tools will assist in creating a payment plan that will benefit both sides.