Bad credit student loans

Tips for getting student loans with bad credit

Every year in the United States, thousands of students feel stuck scrambling to find ways to cover their tuition bill. Even though it feels stressful, most typically succeed.

One of the top ways of funding education in 2019, is student loans. But if you have a bad credit history – or just as bad; no credit – it can be difficult to obtain the funding you need.

While education financing is a risk for lenders, typically lending companies will see education as being a smart investment and keep an open mind for all types of students.

If you’re concerned about finding the money you need for college, here are some ideas to help you… despite your bad credit score.

1. Look into the Federal Direct Loan Program

This program is financed by the U.S. Department of Education. There are four different types of Federal Direct Loans and in some cases students can receive upwards of $20,500 per year in loans toward a graduate degree.

These loans are backed by the federal government and are insured. That means they don’t require a credit check, or a specific credit standing. Learn more about Federal Direct Loans.

2. Look into alternative credit checks

Your credit score is typically based on things like when you pay your bills, how much of a credit balance you carry, if you are in good standing on all of your financial accounts, etc. But some of the country’s biggest credit bureaus are trying to change this.

Recently, credit bureaus like Equifax and Transunion are pushing towards using “alternative” data to score your credit. Each lender will have a different set of alternative data and different criteria for what you’ll need in order to qualify.

Though this option is very new and there are still kinks being worked out in the process; if you are worried about your ability to qualify with a traditional lender, researching how to move forward with a company that does alternative credit checks could be a great option.

3. Use a cosigner

This is a big commitment for the person you are asking, and yes, it can be scary or embarrassing to ask. But the reality is a cosigner will help you significantly if you are facing some of the alternatives due to bad credit.

A cosigner with strong credit can help you:

  • Qualify for a loan if you don’t have enough credit history
  • Secure a lower interest rate (HUGE advantage)
  • Get more affordable loan terms and repayment options

The biggest risk for a cosigner is that another person can impact their credit significantly. If the cosigner is going into this strong, even one late payment from the student can have a serious impact on them.

Should you decide to go the route if utilizing a cosigner, have a conversation about expectations to ensure that both parties understand what is expect of them now, and moving forward.

Frequently asked questions

Can I get a loan with bad credit?

Yes, there is no credit check when you apply for federal student loans. This does require you to fill out the FAFSA each year, as these loans are need-based. You can also get a private student loan with bad credit if you have a credit-worthy cosigner, who takes on financial responsibility if you can’t pay.

How do I get a student loan with bad or no credit?

If you have no credit or bad credit, first apply for federal student loans. You could also seek a private student loan with a credit-worthy cosigner, who takes on financial responsibility if you can’t make your payments.

Can I get a private student loan with bad credit?

If you have bad credit and need a private student loan, your best bet is to apply with a credit-worthy cosigner. A cosigner will share the burden of repayment in the event you’re unable to pay back your student loans.

Are there student loans for parents with bad credit?

Yes, for parents with bad credit, federal PLUS loans are available and do not have any credit requirements. Further, if you can source a credit-worthy cosigner, you may even be able to qualify for certain private student loans. As always compare private student loans to find the right fit.

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