The PLUS loan is not need-based so it does not evaluate your family’s need for assistance loan based on its income or assets. Instead, the PLUS loan program evaluates your family’s credit worthiness, primarily based on a credit score.
Your family’s credit worthiness is based on how much money you have borrowed, how timely your repayments are and whether or not your parents have ever defaulted on a loan or declared bankruptcy. This history is accumulated and organized into a credit score, provided by one of three national credit bureau services, listed below
-
-
-
-
A credit score is developed using the following five weighted factors.
-
Payment History: Approximately 35% of a credit score may be based upon payment history.
-
Amounts Owed: Approximately 30% of a credit score may be based upon amounts owed or other outstanding debt. A credit score can be negatively impacted you are close to your credit limits.
-
Length of Credit History: Approximately 15% of a credit score may be based upon length of credit history. Credits score can be improved by accounts have been open for a long time, especially if they are with one financial institution.
-
Taking on More Debt: Approximately 10% of a credit score may be based upon how much new debt a consumer is incurring.
-
Types of Credit in Use: Approximately 10% of a credit score may be based upon the types of credit currently in use by a consumer. A credit score can be negatively impacted by loans from finance companies.
-
In general, a family needs a credit score of about 625 to be eligible for a PLUS loan. Bankruptcies, defaulted loans, payments overdue by more than 90 days and substantial debt compared to income will also make it difficult to obtain a loan.
Check credit scores now with all three services. Correct any inaccuracies and be prepared to explain any negative reporting.
|
PLUS Loan Requirements
