November 18, 2009
Parent Plus Loan Credit Requirements
When a lender determines a borrowers eligibility for the Parent Plus loan they must examine their credit history, but what is considered adverse credit history you ask? What are some of the markers they look for when rendering a yay or nay decision? Let’s delve into what adverse credit history actually is.
Adverse Credit History
Adverse credit history is defined as an applicant being 90 days or more delinquent on a debt or having been subject in the last five years to a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of an FSA debt. The absence of any credit history is not considered adverse credit. FFEL lenders may establish more restrictive credit standards for determining adverse credit.
When determining whether a borrower is ineligible for a Plus loan based on an adverse credit history, the lender, or the Department of Direct Loans, must obtain a credit report on the borrower from at least one national credit bureau. To provide a more accurate determination of adverse credit, the report must be obtained within a time frame “reasonably” related to the loan period.