Hi Terry
I’m 36 years old and going to school full time in September for a 2 year program. I’ve already been approved for financial aid and federal loans, but will need to take out additional loans totaling about $25,000/$30,000. I have a previous student loan that I paid off on time with only 1 late payment. My credit score is 530 with credit card balances of $1,100 and one account in collections $234. What are the chances of receiving a student loan in my situation? If I pay off all my balances and debts can I raise my credit score by August to better my chances of receiving a student loan?


Terry Says:  Hmm .. how on earth did you let a card go into collection with a balance of only $234?  Obviously, that was a huge mistake.  Definitely contact the lender, and see if you can make some arrangement to pay down the bill.  However, I think you have little chance that they will change the fact that it has gone to collection.  You can make a comment and attach it to the credit report if there is some reason to dispute the collection.  Still, this should serve as a reminder to you — and to other readers — that simply not paying is no way to settle a dispute over a bill!

I am going to send you to a great article at Bankrate.com, that explains how to improve your credit score.  Unfortunately, this is not a quick process.  So I’m going to make another suggestion — and that is that you might want to postpone the educational program for a year until you can both pay down your remaining balance, and build up some savings since you will be going to school full-time.  Borrowing money just to live while you go to school is not recommended at your age.  Don’t mistake me;  it is never too late to go back to school and change the course of your life.  But you don’t want to start out that new life buried in debt.   This is advice you didn’t ask for — but it is sound.  Please consider.

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