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Federal student loans don’t require a credit check, so exhaust federal loan options before looking for private student loans for bad credit. (Shutterstock)
Whether you’ve had past credit problems, or have little to no credit history, it’s still possible to get student loans. You may even be able to get a student loan without a cosigner, as most federal student loans don’t require a credit check.
If you’re considering private student loans, having a cosigner with good credit could improve your chances of getting approved and qualifying for a lower interest rate. Comparing rates from multiple lenders through Credible could help you find the best private student loan available to you.
How to get federal student loans for bad credit or no credit
Before searching for private student loans, ensure you’ve exhausted your federal student loan options first. Federal loans — other than PLUS loans — don’t require a credit check, so past credit problems won’t prevent you from qualifying for Direct Unsubsidized or Subsidized Loans.
Federal student loans also offer several other advantages over private student loans. Here are a few federal options to consider and the benefits of each:
- Direct Subsidized Loans — The U.S. Department of Education pays the interest on Direct Subsidized Loans while you’re enrolled in school at least half-time and during a six-month grace period after you leave school. Since your loans don’t accrue unpaid interest during this period, you wind up with less student loan debt when you graduate than you would if interest was being added to your loan balance the whole time.
- Direct Unsubsidized Loans — You’re responsible for paying interest on Direct Unsubsidized Loans while you’re in school. Unless you choose to pay interest during your school years and the grace period, the unpaid interest will be added to your loan balance. However, these loans usually come with lower interest rates than private student loans and have more flexible repayment options.
- Direct PLUS Loans — Direct PLUS Loans are available to parents of college students and graduate or professional students. These loans require a credit check. But borrowers with poor credit may qualify for a loan as long as they don’t have any defaults, foreclosures, or bankruptcies within the past five years.
HOW MUCH CAN YOU BORROW IN STUDENT LOANS?
8 best private student loans for bad credit or no credit
Once you’ve exhausted your federal student loan, scholarship, and grant options, private student loans can help you cover other education costs. The following Credible partner lenders have minimum credit score requirements below 700.
Ascent: Best for discounts
Ascent offers student loans for bad credit borrowers with and without a cosigner. Once you graduate, you’re eligible for a 1% cash back graduation reward, as long as you meet certain criteria. The lender also offers discounts for enrolling in automatic payments.
- Minimum credit score: 540
- Terms: 5, 7, 10, 12, 15, or 20 years
- Maximum loan amount: $200,000
INvestEd: Best for Indiana residents
INvestEd doesn’t charge application, origination, or disbursement fees. You can get a 2% principal reduction if you graduate within six years.
- Minimum credit score: 670
- Terms: 5, 10, or 15 years
- Maximum loan amount: Up to cost of attendance
MEFA: Best for borrowers who prefer fixed-rate loans
Loans from the Massachusetts Educational Financing Authority are only available to borrowers at public and nonprofit schools — borrowers attending for-profit schools aren’t eligible. MEFA offers fixed-rate loans to graduate and undergraduate students.
- Minimum credit score: 670
- Terms: 10 or 15 years
- Maximum loan amount: Up to cost of attendance
College Ave: Best for flexible repayment options
College Ave offers undergraduate and graduate student loans and loans for parents of college students. You can choose whether you want to make principal and interest payments, interest-only payments, flat monthly payments while in school, or defer payments until you leave school.
- Minimum credit score: Does not disclose
- Terms: 5, 8, 10, 15, or 20 years
- Maximum loan amount: Up to cost of attendance
Custom Choice: Best for past-due education balances
Custom Choice allows you to use your loan funds to cover the past-due balance on other student loans, as well as current education expenses. If you graduate with at least a bachelor’s degree, you may be eligible for a 2% principal reduction on your loan.
- Minimum credit score: Does not disclose
- Terms: 7, 10, or 15 years
- Maximum loan amount: $99,999 annually ($180,000 total)
SallieMae: Best for cosigner release
Sallie Mae doesn’t charge application, origination, or disbursement fees. After making 12 on-time principal and interest payments, you can apply to have your cosigner released from the loan.
- Minimum credit score: Does not disclose
- Terms: 10 to 15 years
- Maximum loan amount: Up to cost of attendance
You can compare private student loan rates from multiple lenders in minutes using the Credible marketplace.
Other lenders to consider
The following two lenders aren’t Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a private student loan for bad credit.
Earnest: Best for borrowers who need a longer grace period
Earnest offers student loans for bad credit or no credit, as long as you have a cosigner with a credit score of 650 or above. The lender also offers a nine-month grace period after you leave school before you have to make loan payments.
- Minimum credit score: 650
- Terms: 5 to 20 years
- Maximum loan amount: Up to cost of attendance
Funding U: Best for borrowers without a cosigner
Funding U offers student loans for bad credit without requiring a cosigner. Instead, the lender considers factors like your academic achievement in college, your likelihood to graduate on schedule, and your projected total student loan debt.
- Minimum credit score: None
- Terms: 10 years
- Maximum loan amount: Up to $20,000 per academic year
Methodology
Credible evaluated private student loan lenders in 10 different categories to determine the best student loan lenders for bad credit student loans. This included interest rates, repayment options, terms, fees, discounts, customer service availability, as well as eligibility requirements and cosigner release options.
How to get a private student loan with bad credit
While you can get a federal student loan with bad credit or no credit, some private student loans are only available to borrowers with good credit. But that doesn’t mean you’re out of options if your credit is less than perfect.
Having a cosigner with good credit can increase your approval odds and help you qualify for a lower interest rate.
How to find a cosigner
A cosigner can be any adult who has a good credit score. They just have to be willing to sign for the loan along with you, confirming they’re responsible for repaying the loan on time and in full if you don’t make payments.
Your parents are the most obvious choice for cosigning your student loans. But if your parents are unable or unwilling to cosign, consider asking another relative, a friend, a guardian, or your spouse.
HOW TO FIND STUDENT LOANS WITHOUT A COSIGNER
Income Share Agreements: An alternative to student loans
Best for: Students willing to give up a percentage of their future salary later to avoid student loan debt now.
Colleges and universities are looking for creative ways to help students pay their higher education expenses without student loans. One way they’re doing that is with Income Share Agreements, or ISAs.
ISAs are contracts in which a school, company, or lender agrees to give a student money for their education now. Instead of making loan payments after the student graduates, the student agrees to give the other party a share of their future income.
Potential benefits of ISAs
- Possible lower costs — If you don’t get a high-paying job right out of college, you don’t have to worry about student loan payments taking up a huge chunk of your income. Keep in mind that federal student loans also offer income-driven repayment plans, so this isn’t a unique benefit of ISAs.
- Job placement — Schools that offer ISAs have an incentive to help you get a high-paying job out of college. As a result, you may get more help with job placement.
Potential downsides of ISAs
- Possibly higher costs — If you get a job with a high salary, paying a percentage of your salary could mean you end up paying more with an ISA than you would by making traditional student loan payments.
- Risk of predatory lenders — The Consumer Financial Protection Bureau recently issued a Consent Order against a company that offers ISAs for misleading borrowers about these agreements, failing to provide adequate disclosures, and charging prepayment penalties when borrowers pay off their ISAs early. It’s important to remember that ISAs are still financial instruments, so be sure you know what you’re getting into before signing any agreement.
ISAs are relatively new, so they’re not as widely available as private student loans. But they may be worth looking at as you consider your options for paying for your education.
If you’ve exhausted your federal student aid options and decide an ISA isn’t right for you, a private student loan may fill funding gaps. Before you commit to a loan, visit Credible to compare private student loan rates from multiple lenders.
Bad credit student loan FAQs
Here are answers to some frequently asked questions about bad credit student loans.
What credit score do you need for a student loan?
The minimum credit score needed for a student loan varies by lender. Some lenders offer student loans to borrowers with bad credit or no credit, so it’s crucial to shop around.
Do credit scores affect student loan rates?
Credit scores don’t affect the interest rates on federal student loans, as those are set by Congress each year. But your credit history does affect the rates available from most private student loan lenders.
Lenders use your credit score to assess the risk that you’ll default on the loan. If you have a low credit score, lenders consider you a riskIer borrower, so they charge a higher interest rate to compensate for that risk.
Can you get a student loan without a credit check?
You can get a federal student loan (other than a PLUS loan) without a credit check. Most companies that offer private loans require a credit check, but not all do. If you’re worried about your credit preventing you from getting a student loan, research lenders that don’t require a credit check. They may be willing to lend to you based on other factors, such as your academic achievements, the likelihood of graduating on time, and future income prospects.
