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Can You Get Student Loans With Bad Credit?

Can You Get Student Loans With Bad Credit?
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Potential borrowers with a history of bad credit — or no credit at all — may not qualify for private student loans, but they will for federal.

Most federal student loans don’t require a credit check, so it’s the best route to take when looking to fund your education if you have poor credit.

In fact, regardless of your credit score, when you are looking to pay for college, you should start taking advantage of all the government loans available to you before shopping for a private loan. Federal student loans typically come at lower interest rates than private loans (which are fixed rates), plus they offer more protection for the borrower, such as patience, deferment, income-based payment plans, and forgiveness programs.

Before that, we break down some of the things to consider when you start looking for college financial aid, and how your credit score can play a role.

1. Start looking for free help

Before you begin applying for student loans, first find ways you can get free money to help cover education costs, such as scholarships, grants, work-study programs. The more you can take advantage of these programs, the fewer loans you will need to take out.

The role of credit rating: Applying for free funding such as undergraduate scholarships usually does not require your credit score information.

2. Next, apply for Federal Student Loans

Next, you’ll want to apply for federal student loans by filling out the FAFSA online® Form (Free Application for Federal Student Aid), which you can find here. Both current and prospective undergraduate and graduate school students can see their eligibility for financial aid by entering their personal information and completing a FAFSA form each academic year in which they need assistance.

The role of credit rating: While the FAFSA form asks for financial details such as your income and savings, it will not ask for your credit score or pull your credit report when you apply. Completing the FAFSA form does not affect your credit score. For more information on the information you’ll need when applying for federal loans, download this free worksheet provided by the US Department of Education.

The exception to this are federal loans that parents or guardians can obtain to help their children pay for college, also known as Parent PLUS loans. These procedures require a credit check, and the website clearly states, “If you place a security freeze on your credit file, you must lift or remove the freeze at each credit bureau before proceeding. Your application will not be processed if you have a security freeze.” Applying for Parent PLUS loans will result in a difficult inquiry about your credit report, which can temporarily lower your credit score.

3. Finally, apply for private student loans

Federal student loans have different borrowing limits depending on a number of factors, such as the type of student loan, the year of study the loan applies to, and whether the student is considered a dependent. Once you (and your parent/guardian) have reached your borrowing limits, you may want to consider private student loans to make up the difference.

The role of credit rating: There are a variety of banks, credit unions, and online lenders that offer private student loans. Most of them (or your co-signing partner) will require a good credit score (670 or higher) in order to qualify.

Those with less than excellent credit should check Earnest for private student loans or for refinancing. Earnest accepts some applicants on fair credit. The minimum credit score is 650 and there is no minimum income requirement.

While you’re shopping for a private student loan, you may come across a few lenders who have no credit or co-signing requirements at all. Know that they will still consider your income and are likely to charge higher interest rates than private lenders who check your creditworthiness.

Earn Student Loan Refinance

  • cost

    No setup fee for refinancing

  • Eligible loans

    Federal, private, graduate and undergraduate loans

  • Types of loans

  • Variable rates (APR)

    Starting at 1.99% (prices include 0.25% off automatic payment)

  • Fixed Prices (APR)

    Starting at 2.98% (rates include 0.25,000)% automatic payment deduction

  • loan terms

    Flexible terms ranging from 5-20 years

  • loan amounts

    Minimum $5,000 and up to $500,000 (California residents must request refinancing of $10,000 or more)

  • Minimum credit score

  • Minimum Income

  • Allow co-location

Editorial note: The opinions, analyses, reviews or recommendations contained in this article are those of the editorial board alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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