Student loans 9 February 2023

10 Best Student Loans For Bad Credit or No Credit

Federal loans are best student loans for bad credit. However, they have a borrowing limit and may not cover the full cost of attendance. We have reviewed the best private student loans for students with bad credit that you can consider to cover the gap in funding.

Private student loans with bad credit

It is possible to get student loans for bad credit. However, private student loans are hard to get with bad credit and do not guarantee approval.

Federal loans are the only loans that do not require a credit history and allow easy approval to students who have bad credit or no credit. They have low interest rates, with a fixed rate of 5.50% for undergraduates in the year 2023-2024, and come with various long-term repayment benefits too. However, federal loans alone might not be enough to cover all the college-related costs which is why some students may require private student loans.

Private student loans are mostly credit-based and require a credit score of at least 670 for approval. If you have bad credit and require a private student loan, you either need to cosign the loan with a credit-worthy cosigner or opt for loans that do not have minimum credit or cosigner requirements.

With the no cosigner loans for bad credit, however, you will pay much higher interest rates that may be above 6% and go up to around 15%.  Moreover, private loans do not have the same benefits as federal loans like loan forgiveness, postponement, and income-based repayment. Therefore, it is best to exhaust all your federal aid options before you turn to private student loans. We have provided a list of the top student loans for bad credit.

How to Get Student Loans for Bad Credit?

  1. Exhaust Federal options first: Exhaust all your federal aid options first before considering private loans. Federal loans offer lower interest rates and are the best options for students who have bad credit. They also come with many protection plans and loan forgiveness options. Most federal loans do not require a credit check or history. Therefore, if you have bad credit or no credit at all, you can still get federal loans if you can qualify for them through FAFSA. After applying for FAFSA, you will eventually receive a Financial Aid Offer containing all the types of federal aid you are eligible for and can receive.
  2. Calculate the funds required to fill the gap in funding: You need to assess how much more money you require to cover the full cost of your selected institution before you proceed.
  3. Compare private lenders: Check out the different private lenders available and compare their rates and terms. Getting a quote from each can help you decide which option would be the best for you in the long term. You should compare them based on repayment terms and options, interest rates, discounts, and fee types associated with each loan.
  4. Get a cosigner: You will need to cosign the loan with a credit-worthy cosigner if you have bad credit to qualify. Regardless of your credit situation, consigning a student loan can increase your chances of approval and get you lower rates.
  5. Collect documentation: Collect all the necessary information and required documents before you start the application process. This way, the process will be quick and easy. The lenders usually have a list of what’s required on their websites.
  6. Apply: You can apply for a loan through the lender’s website. Fill out the online application they have provided and submit the required documents in the correct format. You can also get help from their customer service if you get confused while completing the online application
  7. Accept the offer:  Once you have submitted your application, you will receive a final offer with the rates and terms mentioned. These might be slightly different than the initial quote that you may have received. Make sure to read the terms carefully so you understand the loan and what you are supposed to do. If you agree, then sign the application and the funds will be transferred to you or your institution.

10 Best Private Student Loans For Bad Credit

Most private loans require a good credit score for approval, however, there are some private student loans listed below that are approved based on factors like future income potential or the student’s GPA, but you will pay a higher rate on these. For more reasonable rates and a higher chance of approval, you can opt for the cosigned loans mentioned below.

LenderScholaroo ratingFixed rates starting (APR)Variable rates starting (APR)

Funding U

Great for Students With No Credit

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5/56.997.49

Ascent

Great for Loans Without Co-signers

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4.8/54.625.74

Earnest

Great for Lower-Than-Average Credit Score

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4.8/54.454.99

SoFi

Great For Graduate Students

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4.5/54.494.99

Mefa

Great for Co-signer Loans

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4.2/54.896.99

M Power

Great For International Students With No Credit

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4.2/513.98N/A

Edly

Great For Income-Based Private Student Loans With No Credit

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4.1/5N/AN/A

PNC Bank

Great for automated payment discounts

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4/54.995.34

Prodigy Finance

Best for studying abroad with no-cosigner and poor credit

Visit website
4/5N/A11.06

A.M. Money

Best for students with high GPA and bad credit

Visit website
4/57.08N/A
Lender

Funding U

Great for Students With No Credit

Scholaroo rating
5/5
Fixed rates starting (APR)
6.99
Variable rates starting (APR)
7.49
Visit website
Lender

Ascent

Great for Loans Without Co-signers

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.62
Variable rates starting (APR)
5.74
Visit website
Lender

Earnest

Great for Lower-Than-Average Credit Score

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.45
Variable rates starting (APR)
4.99
Visit website
Lender

SoFi

Great For Graduate Students

Scholaroo rating
4.5/5
Fixed rates starting (APR)
4.49
Variable rates starting (APR)
4.99
Visit website
Lender

Mefa

Great for Co-signer Loans

Scholaroo rating
4.2/5
Fixed rates starting (APR)
4.89
Variable rates starting (APR)
6.99
Visit website
Lender

M Power

Great For International Students With No Credit

Scholaroo rating
4.2/5
Fixed rates starting (APR)
13.98
Variable rates starting (APR)
N/A
Visit website
Lender

Edly

Great For Income-Based Private Student Loans With No Credit

Scholaroo rating
4.1/5
Fixed rates starting (APR)
N/A
Variable rates starting (APR)
N/A
Visit website
Lender

PNC Bank

Great for automated payment discounts

Scholaroo rating
4/5
Fixed rates starting (APR)
4.99
Variable rates starting (APR)
5.34
Visit website
Lender

Prodigy Finance

Best for studying abroad with no-cosigner and poor credit

Scholaroo rating
4/5
Fixed rates starting (APR)
N/A
Variable rates starting (APR)
11.06
Visit website
Lender

A.M. Money

Best for students with high GPA and bad credit

Scholaroo rating
4/5
Fixed rates starting (APR)
7.08
Variable rates starting (APR)
N/A
Visit website

#1 Funding U

Great for Students With No Credit

Apply now

Funding U

5
Scholaroo Rating
Fixed Rates Starting (APR)6.99%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Funding U is a private lender that offers student loans without a credit check. They have flexible repayment plans, competitive interest rates, and fast approval times. Undergraduate students can borrow $3,000 to $20,000 per year. Funding U also has no minimum credit score requirement, making it easier for those with bad credit to get the financial assistance they need. They base their decision on factors like the student’s academic achievement, course load, likelihood to graduate on time, and projected future earnings.

Pros

  • No credit check required
  • Fixed-rate loan terms with repayment periods of up to 20 years
  • Easy and convenient online application process

Cons

  • Interest rates may be higher than other student loan providers
  • Additional eligibility requirements may apply depending on the type of loan you are applying for
  • Proof of enrollment in an accredited college or university
  • U.S citizen or permanent resident
  • Evidence of income to show the ability to repay the loan
  • Fixed-rate interest rates and repayment periods of up to 20 years
  • Payments can be withdrawn directly from your bank account
  • Co-signer release option available for borrowers with good credit and repayment history

#2 Ascent

Great for Loans Without Co-signers

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Ascent

4.8
Scholaroo Rating
Fixed Rates Starting (APR)13.05%
Variable Rates Starting (APR)13.27%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Ascent provides many loan options for students. These include a co-signed loan, a non-co-signed credit-based option, and a non-co-signed future income-based as well. A co-signed loan is a great option for students with poor or no credit history a variable interest rate of 6.16% to 15.59% and fixed rates ranging from 4.53% up to 15.36%. It also provided flexible payment terms and a 9-month grace period.

You can also apply for the non-cosigned outcomes-based loan if you are a junior or senior only. This loan that is also available for students with no credit score or history. However, this particular loan has much higher interest rates with fixed rates ranging from 13.05% to 15.04% and variable rates starting from 13.27% and going up to 15.18%.

Pros

  • Among the best for payment flexibility
  • You can see if you’ll qualify and what rate you’ll get without a hard credit check
  • Stands out for features that enable faster loan repayment
  • Grace period of 9 months which is longer than most lenders

Cons

  • Students enrolled at less than half-time are ineligible
  • International students are not eligible for co-signer release
  • Freshmen and sophomores are not eligible for outcome-based loans without a cosigner
  • Be a junior or senior in college enrolled full-time (or with an anticipated graduation date within nine months of the loan application deadline) in a degree program at an eligible institution
  • Be a U.S. citizen, permanent resident, or eligible for Deferred Action for Childhood Arrivals (DACA) in the United States
  • Maintain a 2.9 GPA or above in your classes
  • Be at least 18 years old, or the age of legal majority in their state of residence
  • Co-signers can only be dropped if the primary borrower satisfies the lender’s underwriting requirements
  • After making 12 qualified monthly payments, debtors can request co-signer releases
  • While still in college borrowers pay $25 each month. When your nine-month grace period expires after you graduate from school, you’ll be required to begin making full payments

#3 Earnest

Great for Lower-Than-Average Credit Score

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Earnest

4.8
Scholaroo Rating
Fixed Rates Starting (APR)4.49%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Earnest offers private student loans to bachelors and graduate-level students. They cover 100% school-certified costs including tuition, books and supplies, laptops, and study abroad costs without any origination fee. They offer independent loans to students with good credit scores of at least 650. Students may opt for their cosigned loans if they are unable to meet the eligibility criteria on their own.  They have low-interest rates starting at 4.49% for cosigned loans and 5.80% for independent loans.

Pros

  • No origination fee or late fees
  • Flexible monthly payments and loan term length offered
  • Rate match feature offered
  • They cover 100% of school-certified costs including study abroad and laptops
  • Offer longer than the average grace period
  • You can skip a payment per year without any consequences

Cons

  • Borrowers or co-signers must have at least a 650 FICO credit score
  • Loans unavailable to some of the states (Nevada excluded)
  • Must reside in a supported U.S. state, be a U.S. citizen or a permanent resident. If not, then must have a consigner who is a U.S. citizen or permanent resident
  • Must be the age of majority as defined by the state of residence
  • Undergraduate borrowers must be enrolled at least half-time
  • Must be enrolled in a 4-year bachelor’s or graduate-level degree at qualified institutions
  • Minimum FICO score of 650 is required
  • 9-month grace period after graduation
  • $25/month Fixed payment option available while in school and during the grace period
  • Can make only interest payments while studying
  • No late payment fees
  • Allows consolidation of private and federal loans in one payment
  • Refinancing available

#4 SOFI

Great For Graduate Students

Apply now

SOFI

4.45
Scholaroo Rating
Fixed Rates Starting (APR)4.44%
Variable Rates Starting (APR)5.99%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

SOFI offers various types of loan options including private student loans for graduate and undergraduate students. Students can borrow an amount anywhere between $1,000 to $100,000 which they can only use for Qualified Higher Education Expenses at an eligible institution. It does include credit scores in the factors it considers to accept a loan and the requirement may be around 650. However, SOFI is not clear about its minimum credit score requirements and it is only a part of the eligibility criteria. You can apply with a credit-worthy cosigner to increase your chances of approval. After making 24 on-time payments, students can apply for a cosigner release.

Pros

  • Flexible repayment options and terms of up to 15 years
  • No late fee
  • Accept co-borrowers
  • A variety of in-school repayment options are available
  • Can borrow up to $100,000
  • Six-month grace period
  • Borrowers become members and are offered additional benefits
  • Rate discounts upon setting up auto-pay
  • Unemployment protection

Cons

  • Bi-weekly payments via autopay are not offered
  • No cosigner release on refinance loans
  • Only 12 months of forbearance offered
  • Requires a credit score of around mid-600s; however, the minimum credit requirement is unclear
  • Reside in the United States or the District of Columbia
  • U.S. citizen, permanent resident of the U.S., or non-permanent resident alien in which case some documentation may be required as proof
  • Age of majority in their state of residence, otherwise, a cosigner with an age of majority will be required for the loan to be approved
  • Enrolled at least half-time in an eligible and accredited school – associate degrees are not eligible
  • Enrolled at a bachelor’s or a graduate level
  • Fixed and variable-rate loan options are available
  • 5, 10, or 15 years of loan terms offered
  • No prepayment penalty or origination fee
  • No late fee
  • Allows in-school and military deferment
  • Allows cosigner release which requires two years of timely payments
  • Interest-only payment option while in school

#5 MEFA

Great for Co-signer Loans

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MEFA

4.2
Scholaroo Rating
Fixed Rates Starting (APR)5.35%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

MEFA, or the Massachusetts Educational Financing Authority, offers private student loans that are best suited for students who expect to earn a consistent income after graduation. They have fixed interest rates with no application or origination fees and a repayment period of up to 15 years. However, to be considered the applicants must meet MEFA’s credit and income requirements. They require a good FICO score of 670 and above. Those who are unable to meet the minimum requirements for approval can apply for their loans with a credit-worthy cosigner.

Pros

  • In comparison to other private lenders, MEFA offers low, fixed interest rates and no fees, making it easier to save money
  • There are no loan fees or late fees
  • Provides a variety of undergraduate student loan repayment plans, including deferred repayment
  • Allows for deferral of undergraduate loans for up to five years and graduate student loans for up to three years

Cons

  • Except for refinancing loans, a hard credit check is required to determine eligibility
  • Allows only one undergraduate repayment plan with co-borrower release and no graduate student or refinancing loans
  • There is no autopay discount
  • Enrolled at least half-time in a degree-granting undergraduate program at an eligible non-profit college or university in the United States
  • Maintain satisfactory academic progress in accordance with the college or university’s requirements
  • Every borrower needs to be an American citizen or lawful permanent resident
  • Have a creditworthy co-borrower who will share repayment responsibility. Loan credit score requirements are not disclosed
  • Allows for military deferment
  • Death or disability discharge available
  • 10- or 15-year repayment term
  • Beginning on the 28th day of the month following the final loan disbursement, borrowers make interest-only payments while they remain in school

#6 MPower Financing

Great For International Students With No Credit

Apply now

MPower Financing

4.2
Scholaroo Rating
Fixed Rates Starting (APR)12.74%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

MPower Financing offers non-cosigner loans to international students. They help international students complete their education in the U.S. and Canada by lending fixed-rate loans of a minimum of $2,001 and a maximum of $100,000. The amount of money you can borrow is limited to $25,000 for an academic period. MPower bases its lending decision on the applicant’s future earning potential rather than on credit. They offer a 10-year repayment period and discounts of up to 0.25% in the interest rate, but their rates are much higher than many other lenders starting at 12.74% with an autopay discount.

Pros

  • No credit check or cosigner is required
  • MPower Financing has loan options for international students
  • It offers loans to DACA recipients
  • Can apply for an MPower Financing loan alongside other loans from other lenders
  • Dedicated student loan advisor for every student
  • Rate discounts
  • Forbearance of up to 24 months
  • Up to 0.25% in interest rate discounts

Cons

  • Support 400 schools in total in the United States and Canada
  • Lend to students in the last two years before graduation or who are about to begin their one- or two-year program
  • Only one term of repayment equal to 10 years
  • Undergraduate or graduate students in the final two years of their program or about to begin a year or two-year program
  • International student, refugee, asylum-seeker, DACA recipient, or United States citizen
  • Admitted to one of the approved schools
  • Payments start 45 days after the loan disbursement
  • Interest-only payments till graduation and during the grace period
  • Remaining months of payments are calculated using a 120-month amortization schedule
  • On-time payments with no pre-payment option of any principal

#7 Edly

Great For Income-Based Private Student Loans With No Credit

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Edly

4.1
Scholaroo Rating
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Edly offers no-cosigner private student loans with income-based repayment options. They do not require a high credit score and offer independent loans to students upon meeting all the eligibility requirements. They do not disclose the minimum credit requirement for approval for their no-cosigner loans but they do require a minimum income of $30,000. Students unable to qualify independently can add a cosigner to their loans for approval. They also offer a grace period of 4 months and payments only start if you are earning more than $30,000. It’s an affordable option for students looking for a private student loan for bad credit.

Pros

  • No credit check or cosigner is required
  • No payment is required if the borrower’s income is less than $30,000 per year
  • Payments can be deferred in case you lose your job
  • No interest rate
  • Income-based repayment
  • Works with more than 1,700 schools

Cons

  • Unavailable to freshmen and sophomores receiving a four-year degree
  • Unavailable to borrowers in Vermont, Maine, West Virginia, and Colorado
  • Hard to predict payments upfront
  • Total loan amount limited to $25000 only with up to $15000 yearly payments
  • U.S. citizens or permanent residents
  • Current college junior, senior, or graduate student
  • Studying in one of the participating schools
  • Need to repay 2.25x the borrowed amount
  • 5 – 12 years of repayment term length
  • Deferred payments offered in case you lose your job
  • Income-based repayment
  • Four-month grace period after graduation

#8 PNC Bank

Great for automated payment discounts

Apply now

PNC Bank

4
Scholaroo Rating
Fixed Rates Starting (APR)6.69%
Variable Rates Starting (APR)8.44%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

PNC offers both co-signed loans and non-cosigned loans. The interest rate for their loans starts at 6.69%. This lender does not disclose its minimum credit requirement but does consider your credit score and history when deciding along with various other factors. If you have bad credit you can opt for their cosigned loans to improve your chances of getting the loan approved. They do have a cosigner release option available too. You can even chat with one of their representatives to get an idea of the options for student loans for bad credit.

Pros

  • Flexible repayment terms
  • No application or origination fees
  • 0.50% discount on rates with automated payments
  • Cosigner Release available
  • Online application
  • Can borrow up to the full cost of tuition and college related expenses

Cons

  • No international student loans
  • Minimum credit requirement undisclosed but considered
  • Enrolled in an undergraduate degree program or a certificate program
  • Enrolled or enrolling at least half-time
  • Must be a U.S. Citizen or permanent resident
  • Satisfactory credit and income history or has a cosigner who does in case of bad credit
  • 5, 10, and 15 year repayment terms
  • Immediate repayment and interest-only payments while in school available
  • Full deferment of principal and interest options available
  • Deferred payments begin six months after you graduate

#9 Prodigy Finance

Best for studying abroad with no-cosigner and poor credit

Apply now

Prodigy Finance

4
Scholaroo Rating
Fixed Rates Starting (APR)N/A
Variable Rates Starting (APR)14.997%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Prodigy Finance is great for students looking to study abroad, who do not have a cosigner or good credit. They approve student loans based on your future earning potential rather than credit. They also cover living costs for such students as it is usually a huge chunk of the costs they have to incur when studying overseas. They provide a convenient online platform on their site for students from eligible states and enrolled at eligible schools to apply. They offer flexible repayment terms from 7 to 20 years but the interest rates for Prodigy Finance student loans are only variable and are quite high, being at around 14.997%.

Pros

  • Provide student loans for studying abroad
  • No cosigner required
  • Credit is not an important factor
  • Provide loans for tuition and also cover living costs
  • Quick, easy online application
  • No hidden fees
  • Longer repayment terms offered

Cons

  • Support limited countries
  • Support students from limited states
  • Support students admitted to eligible institutions
  • Only offers a variable rate
  • Admitted to a supported school and program
  • Must be looking to study abroad
  • Must reside in one of the eligible countries
  • Payments 6 months after classes end
  • Flexible repayment terms from 7 to 20 years

#10 A.M Money

Best for students with high GPA and bad credit

Apply now

A.M. Money

4
Scholaroo Rating
Fixed Rates Starting (APR)7.95%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Chicago Student Loans by A.M. Money does not consider credit and other financial indicators as the most important factors when deciding to lend. They believe that those metrics are only partial indicators of risk. Therefore, they base their decisions on merit majorly. This makes this loan highly favorable for students with academic excellence and poor credit. They also do not require a cosigner.

Pros

  • No cosigner
  • No credit or income requirements
  • Provides merit-based loans
  • Offers flexible repayment
  • Can make in-school payments to pay off loans earlier

Cons

  • Students with poor or average GPAs may not be able to qualify
  • Charges a 4.5% origination fee
  • Does not lend to international students
  • Must be a U.S. citizen
  • Must have Juniors Or Senior Standing
  • Must have above-average GPA
  • Attend An Eligible School
  • Pell-Eligible Or Near Pell-Eligible
  • 6-month grace period
  • Income-based repayment plan offered
  • Forbearance available

Federal Student Loan Options for Bad Credit

Federal loans do not require a minimum score and have basic eligibility requirements for approval. You will be required to complete a FAFSA to find out which type of federal aid and the amount you are eligible for.

There are three types of federal student loans for bad credit.

Direct Subsidized Loans:

These loans are only available to undergraduate students who demonstrate financial need. They do not have a credit requirement and the government pays the interest while the student is in school, during the grace period, and in deferment. There is a fixed APR rate of 5.50%, a standard grace period of 6 months, and students have repayment terms of up to 25 years.

Direct Unsubsidized Loans:

Unlike subsidized loans, the government does not pay interest for students in any period on Direct Unsubsidized loans. The interest accrues while the borrower is in school and deferment. This loan is for undergraduates, graduates, and professional degree students and has the same fixed rate as subsidized loans of 5.50%. It comes will all the benefits a subdized loan comes with and also has repayment terms of up to 25 years and a grace period of 6 months.

Direct Plus Loans:

Direct Plus Loans include two types of loans. One is a Parent PLUS loan for the students’ parents with bad credit and the other is a Grad PLUS loan which is available to graduate students. Direct Plus Loans come with a higher fixed interest rate of 8.05%. These loans do not have a minimum credit requirement but they may conduct a credit check just to make sure that the borrower does not have an adverse credit history like bankruptcy in the past 90 days. You can apply with an endorser in case you have any such problems in your credit history.

The repayment terms for PLUS loans are also up to 25 years and it offers all the same benefits that other federal loans come with like loan forgiveness and income-based repayments.

How to Compare Private Student Loans

While doing your research on lenders consider using the tips below to find the best private student loan.

  • Find a lender with a lower APR rate: The APR is what you pay above the amount you borrowed. The higher the rate, the more the loan will cost you. So, the best loan would be the one with lower APR rates. Moreover, choose loans with fixed interest rates so they don’t change over time.
  •  Avoid loans with additional fees: Opt for loans that do not charge any origination, prepayment, application, or late fee to avoid additional costs.
  • Find a cosigner to sign the loan with you: Having a cosigner can help you better your chances of qualifying for a private student loan regardless of having bad credit.
  • Look for loans with multiple and flexible repayment options: Some lenders offer more flexibility in terms of their repayment terms. Having more flexible and multiple options helps ease the burden off the loan.
  • Look for lenders that offer hardship options: There are various options offered by some lenders that can help you in a crisis. A few of these options may include loan deferment if you become unemployed or earn less than a certain amount of yearly income. Other options may even include forbearance, refinancing, and loan forgiveness.

You can calculate your estimated monthly payments for different lenders using the loan calculator given below. You will need the loan amount, the interest rate being offered by the lender you are considering, and the loan term they are offering.

Enter your loan information

Loan amount

Interest rate

Loan term

What If You are Denied a Private Student Loan?

In case you are unable to get a student loan due to bad credit or any other reason, there are other options that you can consider.

  • Get a Cosigner: A credit-worthy cosigner can help in getting a loan approved if you are having trouble getting one due to bad credit. Upon consigning, they will be equally liable for the loan you both sign for. Even if you are able to get approval for a loan by yourself, adding a credit-worthy cosigner can help get lower interest rates.
  • Scholarships: There are many scholarships available for students that can help them pay for college. Scholarships are financial awards or gifts that do not require repayment. They might not cover their full tuition cost but can help you pay off a chunk of them.
  • Grants: Grants are like scholarships but are usually government or state-based. The amount you get through grants may not be enough to cover all educational costs, but mixing them up with scholarships and a part-time job can help you pay off a significant chunk of it.
  • Part-Time Job: There are many part-time job opportunities available to students now. Some of such jobs pay well too and you can use the money to pay for a part of your tuition. Many of these jobs can be done online from home too which may be helpful for students studying full-time in universities.
  • Other Types of Loans: Personal loans are also another type of loan that students can get to pay for college or related expenses. These loans do come with higher rates and may have stricter eligibility requirements. Also, when getting a personal loan, it is important to read the fine print thoroughly to make sure there are no restrictions on what you can spend your loan amount on.

There are also federal loans available to students with bad credit or no credit. In fact, if you can qualify for a federal loan, they are the best option for students with bad credit. You can cover a huge chunk of your tuition using these loans and the rest you can cover with private loans, scholarships, grants, or part-time work.

Income Share Agreements For Bad Credit

In case you don’t find a lender that fits your situation or you don’t get approved for a loan you can consider other options like an income share agreement.

An income share agreement (ISA) is a sort of contract that enables students to get money for higher education while they are enrolled and repay it with a certain proportion of their income once they graduate. Upon signing the income share agreement, the repayment period and income % are decided. There is no interest charged in income share agreements and this is a good option for students that don’t have a good credit score.

The best conditions for ISA are:

  • You are not eligible for private student loans and you have used up all of your government loan alternatives.
  • You would be subject to hefty interest rates on student loans because of your low credit score.
  • An ISA with appropriate terms and a small payment cap is offered by your university.

Your income share agreement’s funder will decide your eligibility, the income share, and the payback term duration. Your income share agreement funder will also assess your qualifications for college funding and the terms based on your professional goals, educational background, course of study, and future plans.

Funding education can be stressful but with the options of loans and income share agreements you will be able to find a solution that fits your unique financial situation.

Ways to Improve Your Credit Score

There are various benefits to improving credit scores like getting approved for more applications, a higher loan limit, and low interest rates. Here are a few easy and practical ways to improve your credit score.

  • On-time payment: Because payment history accounts for such a large portion of your credit score, it’s critical that you keep up with your student loan payments. Making on-time payments is one of the best ways to use your student loans to build credit – by being consistent with your payments, you’ll notice your credit score gradually rising.
  • Prepaid Credit Card or Secured loan: Another way to improve your credit score is to consider getting a secured loan or a secured credit card. A secured loan requires you to put up collateral in return for the money borrowed, while a secured credit card allows you to make purchases using funds placed into an account that you are responsible for repaying. Both of these options can help build your credit and make it more likely that lenders will approve your application for a private student loan.
  • Make numerous years of on-time payments: Your credit score will rise as the average age of your accounts increases. Keeping accounts open for a long time can help your credit score over time.  Federal student loans have a standard repayment term of ten years, and private student loans frequently have repayment terms ranging from ten to twenty years. Making student loan payments for that length of time will improve your credit score, especially if you’re new to credit.
  • Pay off your debts: Another borrowing behavior that can improve your credit score is paying your debts on time. Consider making a second (small) monthly payment of whatever extra you can contribute if you can afford it. Paying down credit card balances, in particular, can help you lower your credit utilization ratio, which is a key metric in how credit bureaus calculate your score. Working to pay off loans or other forms of debt can also help you learn how to improve your credit score.

FAQS

Can you get student loans with 500 credit score?

Students with a 500 credit score or lower can get federal student loans easily if they are eligible. However, very few private lenders accept applicants with bad or no credit. A.M Money and Funding U are two options to consider. However, most of these non-cosigned student loans for bad credit come with high interest rates.

If you have bad credit and you require a private student loan, the better option would be to co-sign the loan with a credit-worthy cosigner. This will not only help you in getting lower rates but will also improve the chances of loan approval.

Can you get FAFSA with bad credit?

Federal student loans are generally not credit-based. Therefore, students with bad credit or no credit can easily apply for FAFSA to find the type of federal aid they are eligible for.

Do private student loans check credit score?

Most private loans require a credit check. The higher the score is, the easier it gets to get an approval. If you have poor credit or no credit, you can improve your chances of approval by applying with a credit-worthy cosigner. However, there are some lenders that consider other factors more important in determining whether someone will be able to pay back the loan. These lenders may give out loans on the basis of academic achievement, and degree type, and they usually focus on the borrower’s future income-earning potential.

A.M. money private student loans and loans by Funding U do not require a credit score for approval.

What is the minimum credit score required for a private student loan?

Lenders of private student loans often need a credit score of at least 670. You can review our comparison chart to understand which lender works best for you as some may not require any credit score.

What is the easiest student loan to get for students with bad credit?

The easiest loans for such students are those that do not require a credit check nor do they have a minimum credit requirement. Federal loans are a great option in such a scenario. In case you are unable to qualify for federal loans, there are many options for private student loans listed in this post that are easy for students with poor credit or no credit to get.

A few of the private loan options with no credit include loans by Funding U, M Power, and Edly. Other lenders that do not have a high credit requirement include Ascent, Earnest, Prodigy Finance, and A.M. Money.

How can I improve my credit score?

The simplest approach to raise your credit score in the short term is to pay off your current bills, including paying off any outstanding loans, as well as the balances on your credit cards. Building a solid payment history is ultimately the most efficient strategy to raise your credit score.

Are there student loan options for parents with bad credit?

Yes, parents who have bad credit can get a federal Parent PLUS loan to pay for their child’s education. In case there is an issue in getting approved due to poor credit, they can add an endorser with good credit to get approved. Many private lenders also offer student loans to parents but they usually have a minimum credit requirement. Parents can cosign such private loans with a creditworthy cosigner for approval.