Student loans for bad credit

There’s a lot to think about when it comes to student loans. And applying for a student loan with bad credit or no credit can make things feel even more complicated. Plus, you might be wondering if you can even get a student loan with poor credit. 

The good news is that for many federal student loans, credit isn’t a significant factor. But for private student loans and some federal loans, credit does matter. Here are some things to know about student loans and when credit comes into play.

Key takeaways

  • Federal and private student loan options are available to borrowers with bad credit scores.
  • Federal student loans typically don’t require any credit checks.
  • A co-signer can help you qualify for a private student loan.
  • Alternatives to student loans, such as scholarships and work-study programs, can help you reduce your need for student loans.

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Federal student loans for bad credit

You can get a federal student loan if you have bad credit or no credit. Most federal student loans don’t require a credit check. There are four main types of federal student loans, and they all come from the Department of Education: 

  1. Direct subsidized loans: These loans are for undergraduate students with financial need. The government pays the interest on subsidized loans for certain periods of the loan. They don’t require a credit check.
  2. Direct unsubsidized loans: Unsubsidized loans are available to undergraduate, graduate and professional students. Unlike with subsidized loans, borrowers are responsible for paying interest throughout the loan period. Generally, you don’t have to show financial need or have your credit checked to get an unsubsidized loan.
  3. Direct PLUS loans: PLUS loans are the only federal student loans that require a credit check. People with an adverse credit history may still qualify for them, but there may be extra requirements. PLUS loans typically have higher interest rates than other federal loans. They’re usually available to graduate students, professional students and parents of undergraduate students. 
  4. Direct consolidated loans: These loans let borrowers combine all their federal student loans into a single loan. This can help simplify payments and lower your monthly minimum. There’s no credit check to consolidate your federal loans. And the Department of Education says there’s no cost either. But there can be some drawbacks to consolidating student loans

Federal student loans are a popular option to pay for college. But federally backed financial aid isn’t the only option available to students.

Private student loans for bad credit

With private student loans, credit scores matter. But you can still get a loan with bad credit or no credit. 

Some private lenders, like banks and credit unions, may require a co-signer. A co-signer is ultimately responsible for the loan if you can’t pay. The better the co-signer’s credit score, the better the loan terms—like the interest rate—may be.

It’s important to know that if you make late monthly payments or miss payments altogether, it could end up hurting both your credit and your co-signer’s credit, according to the Consumer Financial Protection Bureau (CFPB). 

Before you commit to a private student loan, consider talking to an expert to get help comparing different types of student loans.

Federal loans vs. private loans

If you are starting to consider financing your college education, you may be wondering whether to apply for a federal or private student loan. Federal loans typically have lower interest rates than private loans. And federal loan interest rates are fixed, meaning they stay the same for the entire length of the loan. 

Private loan interest rates might be variable. And variable interest rates can change.

Plus, federal interest rates are predetermined. So they aren’t based on your credit score. 

You also typically have more options when it comes to paying off federal student loans. Federal student loans may offer benefits like deferment, assistance with interest, income-based repayment plans, debt consolidation options and loan forgiveness. Federal loans are also subject to federal action or executive orders. This can give borrowers flexible repayment terms and forbearance in times of crisis, as happened during the COVID-19 pandemic. 

The CFPB recommends evaluating and exhausting all federal aid options, including grants and scholarships, before considering private student loans. In fact, before private student loans are given out, borrowers must fill out a form to confirm they’re aware of all their options. 

The CFPB also says that if you do end up needing private student loans, it’s a good idea to shop around before committing to them.

Student loan alternatives for bad credit

If you’re wary of applying for student loans or you want to minimize your debt, there are alternatives you can also consider: 

  • Scholarships: Available from many sources—some that are overlooked—private scholarships are a great way to pay for your education. It’s a good idea to check with local organizations and businesses that offer college scholarships to see if you qualify for any of them. 
  • Work-study programs: With work-study programs, you can earn money by working part-time for the school you’re enrolled at while gaining work experience along the way. Bear in mind they can be competitive.
  • Working during school: If you don’t meet your school’s requirements for its work-study program, you could find your own part-time job. Many college towns are full of small businesses and restaurants, so finding a position that works with your class schedule could be possible. 
  • Personal loans: If you have a college savings account and just need a small amount of money to cover the rest of your expenses, a personal loan could be an option for you. These short-term loans could have higher interest rates, but there may be more options on how much you can borrow and the length of time you have to pay them back. 

How to apply for student loans with bad credit or no credit

When applying for a student loan, consider these steps: 

  1. Determine your cost of attendance. If you know which college or university you plan to attend, you can calculate the loan amount you will need over the course of your academic career. There might be loan limits on some private and federal financing, so this step may help you narrow down your options. 
  2. Fill out the free application for Federal Student Aid (FAFSA®) form. Next, complete the FAFSA form to find out if you meet any of the eligibility requirements for financial aid, such as grants, scholarships, work-study programs or federal student loans. 
  3. Consider your federal aid options. After you’ve submitted your FAFSA form, you should receive information from your school about how much aid you qualify for. If your federal aid is sufficient, you may only need to accept your federal loan and complete entrance counseling. Entrance counseling is a program to help you understand your responsibility to repay the loan. If you need additional funds, you may want to consider a personal loan. 
  4. Compare private loan terms. Before you choose a lender, you can spend some time researching the loan features available to you. This step could help you find a lender that works for your situation.  
  5. Look for fixed rates. While checking loan terms, it helps to take note of the interest rate of the loan you are considering. Keep in mind that a fixed APR can help keep your payments consistent. 
  6. Research repayment options. As you’re checking rates and terms, take time to understand offers and options for repayment plans. Check the grace period length and enrollment restrictions. For example, federal loans might require you to be enrolled at least half time in order to qualify for payment deferral. 
  7. Find a co-signer. If you’re considering using a loan that requires a credit check, you could ask one of your family members to act as your co-signer. Make sure they meet the minimum credit score requirements before using their information on your application.
  8. Submit a loan application. Once you have selected the loan type and lender you’ll use, you can complete the loan application and submit it. If you have any questions while filling it out, you can speak with a loan officer or financial adviser. 

How to get approved for a student loan

Credit is important, whether it ends up affecting your student loan options or not. 

Worried about how to get a student loan with bad credit? Or do you just want to start building good credit? Here are a few things you might want to consider, according to the CFPB: 

  • Pay off debt. How much current unpaid debt you have can affect your credit scores. That includes debt from credit cards, personal loans, car loans and more.
  • Make on-time payments. A history of late or missed payments could lower your credit scores. Setting up reminders on your phone or computer can help you remember to make payments on time. You can also set up autopay for any bills that offer this option. 
  • Keep credit utilization low. Your credit utilization ratio is a comparison between how much credit you’re using and how much you have available. The CFPB recommends keeping this number below 30%. 
  • Become an authorized user. An authorized user is a person a cardholder has granted access to use their credit card account. If card activity is reported to the credit bureaus, responsible use of credit as an authorized user can help build or improve your credit. Being an authorized user can also help you establish credit if you don’t have a credit history yet. But keep in mind that if the account is not used responsibly by the cardholder or the authorized user, it could reflect negatively on both of you.

Building credit takes time. These are just a few ways you can start to improve your credit. And if you’re curious about how student loans affect credit scores, you can learn more about that, too. 

Should I check my credit score before getting a student loan?

No matter what type of student loan you decide to use, you may want to learn how to check and monitor your credit scores regularly. This can help you know where you stand before you apply for student loans or other lines of credit. It can also help you track your progress and make sure the information in your credit reports is accurate.

One way to monitor your credit is by using CreditWise from Capital One. With CreditWise, you can access your TransUnion® credit report and weekly VantageScore® 3.0 credit score—without hurting your score. CreditWise is free for everyone. You don’t even have to be a Capital One customer to enroll.

You can also get annual free copies of your credit reports from each of the major credit bureaus by visiting

The bottom line

Finding a student loan option that works for your credit score doesn’t have to be complicated. The process might require research and time, but it can be worth it to find a loan that offers a good interest rate and repayment terms.

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