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When making a loan, a private student loan company will look at your credit history to determine your credit worthiness. They pull this information electronically from one of the three big credit reporting agencies (Equifax, Experian, and TransUnion). The credit agencies receive information from most lenders, credit card companies and other services to prepare the report so the information is updated fairly regularly.
When you have bad credit, it may take some time to clean up everything. In fact, some bad credit items like a bankruptcy can stay on your credit history for 7 to 10 years. There are ways to help you ensure you will qualify for a loan with the best interest rate, including:
1. Bills paid on time.
2. Minimal use of revolving credit (i.e. all credit cards).
3. Regular payments on installment loan made on time (i.e. car loans, mortgages, etc.).
4. Percentage of credit card usage (cards not maxed out but still have significant credit available).
5. No collections, liens or judgments.
6. No bankruptcy.
|Jennifer Mathes, Ph.D.|