Career development loans (CDLs) are a popular source of funding for postgraduate study, as they allow you to suspend repayment until the course has finished. The government-sponsored scheme can only be used for vocational courses, but is still applicable for lots of postgraduate courses. For those with bad credit history, though, the CDL may not be an option - which for some students means neither is a postgraduate course.

Sam Riding faced that distressing scenario when he applied for postgraduate journalism courses. A mature student with an undergraduate degree in American Studies from Hull, Sam applied for postgraduate funding for a journalism course but couldn't get a CDL because of bad debt from his undergraduate years. "I was told my credit rating wasnt good enough and so I couldn't get funding," he says. "I had credit card problems in the past and I moved around a lot, which meant my credit rating didn't improve even though I was earning. It made getting the money together for my postgraduate application a nightmare."

When it comes to applying for more loans, banks and other lending organisations will take a forensic look at all your personal finances. Every bit of borrowing, from store cards and credit cards to student accounts (with their overdrafts) and government loans will come up for scrutiny. If there are skeletons in your credit closet, banks will be reluctant to approve additional loans and could close the door before you've even filled in an application form to your university of choice.
Andrew Hammerton from the Co-operative Bank, one of the three banks that offer CDL facilities, says: "Banks use credit scoring criteria to evaluate whether or not to lend. It's less important how much you own or how much debt you have and more important whether or not you have kept up payments."

Sam was able to get on his course of choice, but only because he was lucky enough to have less orthodox methods of fundraising available to him. "I was able to find the money from elsewhere but it meant using up a lot of favours and bothering family and friends," he says.

The National Union of Students (NUS) highlights debt as a disincentive for further study. NUS says there are all kinds of debt other than government loans such as credit cards and overdrafts that can add up to making it difficult for students to do postgraduate study.

Unsurprisingly, banks claim it is not the actual level of debt that any individual prospective borrower has which makes the difference in loan acceptance, but more how they have kept up with that debt.

Not going over your overdraft limit or missing credit card payments frequently is the key to preserving your credit record and making you someone banks want to lend to. Banks emphasise "responsible" borrowing, which means they won't lend you the money if it's not going to help you and become a burden for both of you.

The National Association of Citizens Advice Bureaux recommends that anyone with bad debts should take action immediately, communicating with their creditors: "For repairing credit ratings the best thing is to start paying on time for what debt you have as soon as possible. Stick to minimum payments and standard payment times and you are going to look better to lenders."

More optimistically, banks do want students as clients because they realise that graduates and postgraduates have the earning potential which means they'll be able to pay it back later on. However, as Keith Tondeur, national director of Credit Action points out: "Students should definitely be careful taking on too much debt because it can really affect their future lives."

Jack Doyle