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Having poor or thin credit can be a major obstacle when you need to borrow money — for example, you might have a hard time getting approved for a private student loan. But you still have some options available.
Understanding how to find the best student loans for bad credit can help you find the right financing for your needs.
Here’s what you need to know about getting a student loan with bad credit or no credit history:
- Federal student loans for bad credit or no credit
- Best private student loans for bad credit or no credit
- Our methodology
- How to get a student loan with bad credit
- Adding a cosigner may get your application approved
- How to find a cosigner
- How to improve your credit score
- Income Share Agreements: An alternative to student loans for bad credit
- Bad credit student loan FAQs
Federal student loans for bad credit or no credit
Before you look into private student loans, make sure you’ve exhausted all your federal student loan options.
Most federal student loans don’t require a good credit score, and all borrowers get the same interest rates regardless of credit history. Federal student loan borrowers also have access to flexible repayment options, deferment, forbearance, and student loan forgiveness programs.
The U.S. Department of Education offers three types of federal student loans:
- Direct Subsidized Loans: Undergraduate students who demonstrate financial need may be eligible for Direct Subsidized Loans. The government pays the interest on these loans while you’re in school and for the six-month grace period after you graduate.
- Direct Unsubsidized Loans: Any undergraduate or graduate student can qualify for unsubsidized loans, regardless of financial need, but you’re responsible for all the interest. So you’ll either have to pay interest or let it accrue while you’re in school and during the grace period.
- Direct PLUS Loans: Parents of undergraduate students, graduate students, and professional students may qualify for Direct PLUS Loans, which have a higher interest rate than other federal student loans.
Best private student loans for bad credit or no credit
These Credible partner lenders offer student loans for bad credit.
|Lender||Fixed rates from (APR)||Variable rates from (APR)||Loan amounts||Min. credit score|
|4.62%+10||6.16%+10||$2,001 to $400,000||Does not disclose|
|11.25% - 24.5% APR||N/A||$5,000 to $40,000||640|
|4.37%+8||6.85%+8||$1,001 up to 100% of school certified cost of attendance||670|
|4.89%+||N/A||$1,500 or $2,000 up to school’s certified cost of attendance|
(depending on school type and minus other aid received)
your credit score. 100% free!
Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 10Ascent Disclosures | 1Citizens Disclosures | 2,3College Ave Disclosures | 11Custom Choice Disclosures | 6Discover Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures
Ascent offers student loans from $2,001 to $400,000 — though keep in mind that the maximum loan amount will depend on whether your credit is tested or not. You can choose from a variety of loan terms ranging from five to 20 years.
Plus, if you graduate within five years of taking out an Ascent loan and sign up for automatic payments, you could get a 1% cashback graduation reward.
- Options available for students who don’t have a cosigner or credit history
- 0.25% to 2.00% autopay discount
- Cosigner release offered (after 12 months)
- Limited repayment term options for fixed-rate loans
- Non-cosigned options not available to freshman and sophomores
- Cosigner release not available for international students
Learn More: Paying for Trade School: Financial Aid and Student Loans
2. Happy Money
If you’re planning to consolidate high-interest credit card debt, Payoff could be a good option — its personal loans can be used only for this purpose. You can borrow $5,000 to $40,000 with repayment terms from two to five years.
- Free FICO score updates
- If you lose your job, Payoff will work with you on payments
- Offers scientific personality, stress, and cash flow assessments to help you get a better understanding of your personal finances
- Longer loan approval period
- Origination fees from 0% to 5%
- Not available in Massachusetts or Nevada
If you’re an Indiana resident or are attending an Indiana school, you might qualify for a student loan from INvestEd. You can borrow $1,001 up to your school’s cost of attendance (minus any other financial aid you’ve received) and can choose a repayment term from five to 15 years.
- 2% principal reduction for students who graduate from their program within six years
- 0.25% autopay discount
- Competitive rates
- Only available to borrowers who are Indiana residents or who are attending Indiana schools
- Long cosigner release period (48 months)
- Charges fees for late or returned payments
Learn More: Best Law School Loans for Law Students
MEFA loans are available to students attending public or nonprofit universities. These loans start at $1,500 for public school students or $2,000 for private school students and could cover your school’s cost of attendance (minus any other financial aid you’ve received).
- Might be able to defer payments for up to five years
- No fees
- Three repayment plans available
- No discounts
- Cosigner release only available to undergraduates who took out a 15-year loan; deferred payments; and made consecutive, on-time payments for 48 months
- Variable rates not offered
Check Out: Best Medical School Loans
Credible identified the “best” private student loan lenders by looking at data points in the following categories, using the weighting system listed:
- Minimum fixed rate: 26%
- Minimum variable rate: 13%
- Term length: 5%
- Repayment: 10%
- Fees: 10%
- Discounts: 4%
- Customer experience: 10%
- Cosigner release: 10%
- Other: 12%
How to get a student loan with bad credit
If you’re ready to take out a student loan, follow these four steps:
- Fill out the FAFSA. Start by completing the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA results to determine whether you’re eligible for federal student loans and other federal financial aid, such as Pell Grants.
- Apply for scholarships and grants. Unlike student loans, college scholarships and grants don’t have to be repaid — which makes them a great way to pay for school. There are no limits to how many scholarships and grants you can get, so it’s a good idea to apply for as many as you can. You might also qualify for school-based scholarships, depending on your FAFSA information.
- Take out federal student loans. You’ll also need to fill out the FAFSA to apply for federal student loans. These loans are generally a good place to start if you need to borrow money for school — mainly because they come with federal benefits and protections, such as access to income-driven repayment plans and student loan forgiveness programs. Additionally, most federal loans don’t require a credit check, which could make them a great choice if you have bad credit.
- Consider private student loans to fill in the gaps. After you’ve exhausted your scholarship, grant, and federal student loan options, private student loans could help fill any remaining financial gaps. Before you take out a private student loan, be sure to consider as many lenders as you can to find the right loan for you.
Learn More: Taking Out Student Loans Without a Cosigner
Adding a cosigner may get your application approved
You’ll typically need good to excellent credit to be eligible for a private student loan, which could make it hard to qualify if you have bad credit. If you’re struggling to get approved, consider applying with a cosigner who has good credit to improve your chances.
Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own — which could save you money on your student loan.
But if you applied with a cosigner and were able to qualify for a five-year loan with an 8.17% APR, you’d pay $3,322 in interest with a total cost of $18,322 — saving you $1,004.
No matter if you have a cosigner or not, be sure to consider how much a student loan will cost you in the future. This way, you can prepare for any added expenses.
You can find out how much you’ll owe over the life of your federal or private student loans by using our student loan calculator below:
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan, assuming you're making full payments while in school.
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Compare rates without affecting your credit score. 100% free!
Checking rates won’t affect your credit score.
How to find a cosigner
A cosigner can be anyone with good credit — such as a parent, another relative, or a trusted friend — who’s willing to share responsibility for the loan. Just keep in mind that they’ll be on the hook if you can’t make your payments.
Asking someone to cosign a loan and put their credit on the line is a big deal, so it’s important to prepare before you make the request. Here are a few things you can do:
- Have a plan. It’s a good idea to make a plan for how you’ll handle your loan if you’re approved with your cosigner’s help. This should include when you’ll be making payments and what happens in case you can’t make a payment on time.
- Use teamwork. Go through the loan process with your cosigner so you’ll both fully understand the terms you’re agreeing to.
- Know the risks. Make sure your cosigner understands the risks that come with cosigning a loan. While a cosigner can help you get approved with their good credit, they’ll be liable if you don’t make your payments. Missing payments will also damage your cosigner’s credit — as well as yours.
- Be open and honest. Be transparent when it comes to discussing the risks of cosigning a loan and what happens if you don’t make your payments.
How to improve your credit score
If you can wait to borrow for school, it might be a good idea to spend some time improving your credit first. Whether you’re a new borrower just starting to build your credit or someone with less-than-perfect credit, here are a few ways to potentially boost your score:
- Become an authorized user. Ask someone you trust (such as a parent or relative) to add you as an authorized user on one of their credit card accounts. This could help raise your score as the owner of the account uses and pays off the card — without you even having to use the card yourself.
- Report utility bills to credit bureaus. Services like Experian Boost will report various bills — such as phone, utilities, or streaming services — to the credit bureaus. This could improve your overall payment history, which might boost your credit score.
- Dispute credit report errors. If your credit report contains errors, they could be dragging your credit score down. You can use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, be sure to dispute them with the appropriate credit bureaus.
Check Out: Summer Financial Aid and Student Loans for Summer School
Income Share Agreements: An alternative to student loans for bad credit
- Students who’ve maxed out their federal aid and aren’t able to find a cosigner for a private student loan
- Students who are confident they’ll have a good, steady income after graduation
If you can’t get a private student loan but still need additional funds for college, an Income Share Agreement may be an option worth considering. An ISA can be easier to obtain than some types of student loans, but it may end up being more expensive in the long run.
With an ISA, a lender (who is either your college or a private lender) provides you with a lump sum now to use toward your college expenses. In exchange, you sign a contract to pay the lender a certain percentage of your gross monthly income — typically anywhere from 2% to 17% — for a set number of years (usually two to 10) once you leave school. There’s no interest on the money you borrow with an ISA.
Income Share Agreements have a minimum income threshold that you’ll need to earn before you have to begin paying your lender. They also have a payment cap, which is the most you’ll have to repay. These caps may be set as high as 2.5 times the amount you borrowed.
Unlike private student loans, you don’t need a cosigner or good credit to get approved for an ISA. If you’re on track to complete a degree in a desirable field with good earnings, that’s usually enough to make you a good candidate for an ISA. But that doesn’t mean it’s always the best choice.
Before committing to an ISA, consider these points:
- It’s hard to predict the total cost. Although you don’t pay interest in the traditional sense on an ISA, it can be difficult to predict what your total repayment costs will be, because the total amount you’ll repay depends on your future earnings.
- You can’t refinance your way to a better deal. Unlike a student loan, you can’t refinance an ISA with another lender to get more favorable terms. If you want to pay an ISA off early, you can pay the amount that brings you up to your payment cap, if you have one.
- You may not be able to borrow as much as you need. Your funding limit will depend on your expected earnings. For example: If a lender agrees to provide funding up to 15% of your expected annual income after graduation, and your expected earnings are $67,000 a year with your degree, you could qualify for $10,000 in funding. That may not be enough to completely cover any funding gap.
How do I know if an income share agreement is right for me?
Ultimately, the decision to go with an ISA or a student loan might depend on more than just which might provide the lowest total repayment cost. An ISA can be cheaper to repay than a student loan and provide flexibility in repayment if your career hits a bump in the road.
Income share agreements vs. private student loans vs. federal PLUS loans
|ISAs||Private student loans||Federal PLUS Loans|
|Borrowing limit||Depends on expected earnings||Up to cost of attendance|
(subject to ability to repay)
|Up to school-certified cost of attendance
(no evaluation of ability to repay)
|2 to 10||5 to 15||10 to 25|
|Credit requirements||Can’t have an adverse credit history|
Bad credit student loan FAQs
Here are answers to some frequently asked questions about student loans for borrowers with bad credit.
What credit score do I need to get a student loan?
This depends on the type of student loan, as well as the lender. For example, most federal student loans don’t require a credit check, so you might qualify regardless of your credit score.
But if you want to take out a Grad PLUS Loan or Parent PLUS Loan, you can’t have an adverse credit history.
For private student loans, the required credit score depends on the lender. You’ll typically need good to excellent credit to qualify, which generally means a credit score of 700 or above. But keep in mind that some lenders work with borrowers who have scores lower than this.
Learn More: How to Get Student Loans for Community College
Do credit scores affect student loan rates?
While your credit score won’t affect federal student loan rates, it will affect the rates you qualify for from private lenders. Generally, the higher your credit score, the lower the rate you might get on a private student loan.
Also keep in mind that applying with a cosigner who has good credit could get you a lower interest rate.
How can I get a student loan with no credit check?
Unlike private student loans, most federal loans don’t require a credit check, including:
- Direct Subsidized Loans: These loans are available to undergraduate students with financial need. The government covers the interest that accrues on subsidized loans while you’re in school.
- Direct Unsubsidized Loans: These loans are available to both undergraduate and graduate students regardless of financial need. Unlike with subsidized loans, you’re responsible for all interest that accrues on unsubsidized loans.
To apply for federal student loans, you’ll need to complete the FAFSA.
See also: How to Get a Student Loan With No Credit Check
What is the average student loan interest rate?
Congress sets federal student loan interest rates each year — the actual rate you get will depend on the type of federal loan you take out. Here are the rates you can expect for the 2022-23 academic year:
- Direct Subsidized Loans: 4.99%
- Direct Unsubsidized Loans (undergraduate): 4.99%
- Direct Unsubsidized Loans (graduate and professional): 6.54%
- Direct PLUS Loans: 7.54%
Private student loan interest rates are set by individual lenders according to market conditions. Here are the average rates offered to borrowers with credit scores below 680 who applied for a private student loan through Credible in May 2022:
- Five-year variable-rate loans: 4.99%
- 10-year fixed-rate loans: 6.22%
Keep Reading: Student Loans for DACA Recipients
Can you be denied for student loans if you have bad credit?
You may get denied for a federal Direct PLUS Loan or a private student loan if you have an adverse credit history. In either case, you may be able to qualify for the loan with a cosigner (known as an endorser for Direct PLUS Loans). Make sure you partner with a cosigner with good credit.
Check Out: What to Do If You’re Denied a Student Loan With a Cosigner
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Dori Zinn contributed to the reporting for this article.Methodology: Credible evaluated loan and lender data points in 10 categories to identify the “best companies” for private student loans. We looked at interest rates, repayment terms, repayment options, fees, discounts, and customer service availability offered by 15 lenders. We also considered each company’s eligibility, cosigner release options, whether the minimum credit score is available publicly, and whether consumers could request rates with a soft credit check. Credible receives compensation from its lender partners when a user of the Credible platform closes a loan with the lender. Read the full Credible rating lender methodology. Learn about Credible’s mission and promise to our readers.