How to Get Credit Card With Student Loan Debt

How To Get Credit Card With Student Loan Debt is a very common question amongst all students who have taken loan and looking for a credit card. We have consolidated 4 common questions that every student encounters while applying for a credit card with a student loan debt.

If you are gearing up to apply for college and feel you do not have sufficient funds to get into your dream college, you may think that opting for student loans will help you. However, on the contrary, student loans can be the true evils of your life. 

Student loan debt throws a significant impact on your financial independence and lowers your standards of living. You may have to abandon many of your dreams if you end up in student loan debt. You may also find yourself giving up many job opportunities that would otherwise fuel your aspirations and dreams.

You may end up doing things that would help you cover your student loan, but you will not be happy with how it shapes your major issue that may come across as availing of a credit card. All the major credit bureaus treat student loans like every other installment or EMI loan.

If you fail to make timely payments, it will impact your FICO score, which in turn puts you in the high-risk category and lenders will most likely not extend credit to you in the future. As mentioned earlier, you may have to give up on your dream of buying a car, a home, or any large purchases that may require you to take the aid of a credit card or loan. 

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Do Student Loans Affect The Ability to Get A Credit Card?

The answer is yes. Student loans do take a hit on your ability to get a credit card. However, that happens in certain specific circumstances where you fail to repay your student loan instalment amount. Here are some points that will help you understand the effect of the failure to repay student loans and how it can affect your ability to get a credit card.

1. Defaulting on student loans can affect your credit score.

If you are not aware by now, repaying your credit is one of the significant factors affecting your credit score. A student loan is one of the first loans that a student avails in his lifetime. Hence, irregular repayments or standard defaults can cause a lot of trouble for the student. The credit score will take a hit. No student must start their innings with defaults and irregular repayment of loans. 

2. Regular defaults will affect the credit score of your co-borrower

Student loans are generally sanctioned based on the credibility of the co-borrower. It happens because the student has no income and credit worthiness that can be verified. Hence, details of the co-worker like spouse, sibling, or parent are considered. So, if you fail to repay the loan, your co-borrower also comes at a risk. 

3. Increased hard enquiries

It again depends on your co-borrower’s credit score. If the credit score is not so good, you may not be sanctioned with the loan through your first application. Also, if you make repeated enquiries regarding the loan, you will land up with more hard inquiries that will negatively impact your credit score. 

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Does Student Loan Deferment Affect Credit Score?

A student loan deferment or deferral allows students to postpone making student loan repayments. The postponement could be of the principal amount, the interest, or both. But this can be done only for a period of time. You will have to explain your circumstances clearly to the lender. Based on this, the lender may approve your deferral request. 

But hold your horses. Your lender will approve only certain exceptional circumstances. These may include situations that involve your inability to work, such as a disability, maternity leave, unemployment, rehabilitation training program, etc. Deferrals are also allowed in case of additional studies such as medical-school residency, a full-time graduate fellowship, and more.

Also, certain types of jobs, including public service, or teaching in a designated area, shall be eligible for deferrals. 

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Denied Credit Card Because of Student Loans

If you are a student and you want to avail a credit card, chances are you may be in a dilemma whether your application will get approved or not. Although several student credit cards are available in the market, the application approval makes students skeptical. 

It is easier to qualify for a credit card if you do not have an established history. However, if you have ongoing loan repayment, it depends on many factors. You could be denied a credit card for several reasons, including bad credit history, student status, etc. 

If you are wondering the reasons why you are denied a credit card, here is what you should know.

1. Poor existing credit

You can get a student credit card if you have a limited credit history or no credit history. However, if you have red marks on your credit history, it will become an issue. More specifically, if you have fallen behind your repayment schedule or defaulted on any other forms of credit, you are unlikely to qualify for a credit card. 

2. Lack of income

Your credit card lender may want to see proof that you can afford credit card repayment bills. For this, you do not have to earn tons of money, but some part-time jobs that bring in basic income would suffice. Present laws state that you can avail of a credit card before you turn 21 if you prove that you are financially capable of repayment. It is also applicable to your co-borrower. 

3. Identity theft

Identity theft is pretty standard, and many youngsters get trapped in it. Some thieves steal personal information and use it to open a new credit account and damage it by failing to repay. Hence, until this issue is sorted, you will not likely qualify for a new credit card. 

4. Insufficient proof of enrolment in college

When students begin their application for credit cards, they will have to provide proof of enrolment in college. A college acceptance letter, expected year of graduation, and a college mail ID are some of the commonly asked for proof of enrolment. If students fail to provide this information, the credit card issuer will assume that they are not in any school and thus, reject their credit card application. 

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How Do You Get A Credit Card When You Have Student Loans?

Getting a credit card with an ongoing student loan is feasible but not guaranteed. Ultimately, it all depends on the student’s credit history and potential to land a job after college. However, if the finances are well sorted, then getting a credit card is not difficult at all. 

So, it is important that as a student, you learn the importance of financial management so that you can manage your finances (expenses) from day one. 

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How To Get Credit Card With Student Loan Debt

When it comes to credit card or any type of banking debt, it is always better to maintain an healthy relationship with bank. Always maintain a good CIBIL score. Try to pay all the previous EMI’s on time. In that way your credit score will have a steady graph.

While sanctioning a credit card especially for students banks do lot of scrutiny. Because students usually do not have any active or permanent income source. If banks give them credit card, and later they don’t repay, it will become a bad asset for them and marked as negative in the balance sheet.

So if everything is clear from a students side, then it is not difficult to get a credit card with a student loan debt. Hope this gives some idea about How To Get Credit Card With Student Loan Debt.

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Final Words !

If you have scrolled until here, we hope that you have a fair idea of How To Get Credit Card With Student Loan Debt. Hence, make sure you maintain your finances well.

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