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Author Topic: Getting Private Loans  (Read 1925 times)

thechoson

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Getting Private Loans
« on: April 06, 2004, 11:47:59 AM »
Anyone know how tough it is to get private loans?  My credit is decent cause I make all my payments on time and everything, but I do have some credit card debt.  I am going to need to take out some private loans for law school, so I was wondering how good my credit would have to be.
Thanks!

melissa2781

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Re: Getting Private Loans
« Reply #1 on: April 06, 2004, 12:17:04 PM »
Funny thing i found out about private loans while visiting law schools this weekend.... ill share it with ya.

the federal government made it mandatory that all graduate schools, and perhaps undergrad too, but not sure, have to make a list of the estimated cost of living and break it down into categories, such as tuition per credit, room and board, transportation, blah blah blah.  so lets say the tuition at law school A is $25,000 a year... they may total the estimated cost of living at $35,000 a year.  The most you can get in federal financial aid is $18,500.  Count in any scholarships or grants you may recieve from the school.  The diferrence between the total of those and the estimated cost of living is the most you are eligable for a private loan.  that sucks so much, dosnt it? 

it dosnt take into consideration ppl like me who have to buy furniture and move across the country.    it dostn take into consideration if you possible have to make car payments or medical insurance payments.  So it forces you to find apartments w/ cheaper rents, which often times arnt in the best neighborhoods you'd want to find yourself in,  and by my estimation im going to have about $15-20 a week for food.  I guess i can stretch that and make it work.... but those are things i guess you have to consider if you want law school bad enough.

As far as credit.... as long as your credit is decent you'll be fine.  a late payment here or there is fine...  and the amount you are in debt will really only matter if you are REALLy in debt by the thousands of dollars.  You can call any financial institution and ask them if your specific amount will effect anything.  generally they are willing to give out loans to law students ive been told.

anyway, sorry i went off on a tangent about private loans... i was just annoyed this weekend when i was informed about the loans.  Good luck.
**The future belongs to those who believe in the beauty of their dreams ~ Eleanor Roosevelt**

Revenant

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Re: Getting Private Loans
« Reply #2 on: April 06, 2004, 01:52:20 PM »
I've been reading the other thread about financial aid and was wondering if it included private loans as well -- that is, if private loans are disbursed after school starts (i.e. disbursed to the school and received as a refund check).  I was under the impression that if you applied for a private loan through Citibank for the amount of $38,0000, that they would give you a line of credit of $38,000 and you can withdraw whatever you want to a checking account or something whenever you wanted.  Anyone have experience with this?

r_poster

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Re: Getting Private Loans
« Reply #3 on: April 06, 2004, 02:02:29 PM »
Loan terms are generally dictated by your credit score as calculated by Fair Issac & Co (FICO score).  You can get this number at www.myfico.com for some fee between $12-40 depending on how much "extra" info you want.  For your money, you'll get a merged credit report and your score.

You can get your credit reports for about $8 online or free by mail (if you live in certain states) directly from one of the three major credit bureaus.  These will not contain the FICO score but will give you an idea of what kinds of debts are listed and what your payment history is overall.

All the sites explain how credit scoring works and how to raise your score.  Rule of thumb is that if you are in the high 600s and up, you'll get a decent rate.  If you are in the low to mid 600s you'll get a loan but not at the best rate, if you are below 600 you will need some luck.


Melissa2781 is correct, educational loans are limited to projected school budget - aid.  Exceptions can be made for special circumstances but those are rare.  However, the limits are on educational loans only.  There are many kinds of loans that can be tapped to pay costs:  relocation loans, home equity loans (these rates are nearly as low as private educational loans) and if there is absolutely no other alternative, consumer loans.


jamie_va

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Re: Getting Private Loans
« Reply #4 on: April 06, 2004, 04:49:57 PM »
I read a post on another discussion board that talked about BankOne education loans.  They will loan you up to $30,000/yr regardless of your school's Cost of Attendance.  The rates are a little higher than the Federal loans (but still not that bad) and you can defer payments while in school.  The only catch is that you have to have good credit and work experience or a co-signer that has both.  It's not a bad option if you have some high interest debt to pay off or you need more than the COA.  They will send the money directly to you if you can provide proof of enrollment (tuition bill, letter from school stating you are enrolled, class schedule, etc.).
That's one way of getting around school's with low COAs.

cal4ever

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Re: Getting Private Loans
« Reply #5 on: April 07, 2004, 04:39:13 AM »
My revolving balance is quite high.  Not THAT high, but too high for a college student.  Should I try to get a loan to pay off my credit cards before law school?  It seems that my credit rating would be much better if i had less revolving balance.  It seems that having more installment accounts is better than having a high revolving balance.  Am I making a correct assumption or am I horribly wrong about this? 

Thanks.
I am thanking my lucky stars that I got into Boalt Hall!  Three more years in Berkeley.

Jeremy

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Re: Getting Private Loans
« Reply #6 on: April 07, 2004, 03:32:57 PM »
You are correct.  In the credit world, revolving debt, i.e. credit cards, open accounts, are frowned upon.  Even if they have a zero balance, the potential for instant debt is very high.  If you want to increase your credit score, you have to pay the revolving off and CLOSE the accounts.  Simply paying them off does nothing for your rating.  A creditor wants to see that you have no other debt, that the debt you did have was paid on time and that you are a stable person.  The credit report reflects all of this very well.  The report shows where you work now and where you have worked in the past.  It shows your current address and past addresses. If you have an alias, it will show that as well.  It really reflects a lot on how well you manage yourself financially.
The ability to reason is a magnificant thing.  The ability to ignore this ability is even more amazing.

r_poster

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Re: Getting Private Loans
« Reply #7 on: April 13, 2004, 05:46:43 PM »
But remember not to close all your accounts.  Creditors do a (debt/potential debt) ratio.  If you have a 100 dollar balance on a card with a 200 dollar limit and you closed all your accounts except that one card, you have suddenly pushed your ratio to 50%.  That may make the lender think you are a big spender just going out and buying things whenever you have the cash.  Basically, only leave open cards you use.  Leave at least one card open.  Pay you balance every month, in full, and if you need to make changes, do it NOW.  It takes at least a month for your credit report to reflect any changes.

wolfman1977

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Re: Getting Private Loans
« Reply #8 on: April 14, 2004, 04:34:37 AM »
I agree with r_poster.  It's often said that it's best to close your credit acounts in order to approve your attractiveness to lenders.  Having worked in credit a litle bit, I think that the negative effect that would have on your debt/potential debt ratio is the bigger worry.  (MSN actually had an aricle on this about a while back).  You can have one billion dollars in available credit, and having a million dollars of debt in that situation is not a terrible thing (I believe 20% or lower is the ideal ratio).  This may belong on the other thread, but I have heard that 640 or thereabouts is the lowest score one can have in order to be approved for a private loan, but that's just what I'v heard.

jas9999

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Re: Getting Private Loans
« Reply #9 on: April 14, 2004, 11:44:45 AM »
An important thing - get a credit report and make sure there are no mistakes on it! If you can get a free one (try http://www.consumerinfo.com, you just have to cancel the protection service within 30 days), that's great, but if you have to pay, it's worth it. You can get all three major reports with a credit score for about $40, or just the equifax report with score for $13 from equifax.com.

I've been battling with Equifax for a year to have some incorrect information removed from mine, after a hospital ER billing error (they had my address and insurance company wrong, so when they tried to bill the company, they refused to pay, and when they tried to bill me, the mail was returned) led to two collections accounts in my name.

If I hadn't checked on this a while ago, I'd be screwed when it came to getting loans. It's an exasperating process, but if I hadn't have taken care of this, I'd be facing much higher interest rates because my credit score was fairly low due to the collections items.