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I was recently denied for a gradPLUS loan, and I have a few questions regarding my options.

1. I have a couple of accounts in collections; about $1,000. My parents have offered to pay it off if it will help me get approved for the loan. If I pay it off now will I be able to document it in time to get approved for a loan by this fall?

2. I have about $3,000 in debt between three different credit cards. I will be able to pay this off in a few months with my tax return and some extra money coming in at work. Does credit card debt affect your ability to get approved for a gradPLUS loan?

If anyone knows anything that will help me get approved for a loan by this fall that would be great.

How is $1000 in collections "nothing major"?

It's not the credit card debt. I have way more than that.

Grad Plus wrote:2. What is considered to be an adverse credit history?
You are considered to have an adverse credit history if you are 90 or more days delinquent on any debt or if, within 5 years of the date of the credit report, you have been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or writeoff of a Federal Student Aid debt (for example, a Direct Loan or Federal Stafford Loan).
3. What are my options if I have an adverse credit history?
You may still receive a Direct PLUS Loan if you obtain an endorser who does not have an adverse credit history. An endorser is someone who
agrees to repay the loan if you do not repay it.

I realized the "nothing major" part might bring on some criticism. You beat me to the edit.

I guess I think it's not that bad because its medical debt, and not something where I made a bad decision or did something stupid to get into debt. Also, having my parents offer to pay it off earlier tonight makes me feel a lot better about it.

SPAM

nicktoff wrote:I was in a similar situation as you, I had taken out some cash advance loans (LinkRemoved) before I was denied from gradPLUS, and my credit score wasn't as great as it could be. Your second point, credit card debt, can also reduce your credit score. Maybe that is why we were denied?

They don't generally look at your credit score for GradPlus....just delinquent accounts.