Can I co-sign a student loan with bad credit?
Quick insights
- Federal student loans are a common starting point for borrowers because they usually don't require a credit check.
- Private lenders may review a co-signer's credit history to help determine eligibility and terms.
- Improving your credit profile before applying may help when qualifying for a loan.
Many families want to help their children pay for school by co-signing a student loan, but may have questions regarding eligibility depending on credit history. Federal student loans may offer fixed rates and different eligibility requirements than private loans.
If federal student aid isn't enough, private loans may be available, including some that allow for co-signing with lower tier credit scores.
Can I co-sign a student loan if I have bad credit?
Lenders may use your credit score as one of several factors to assess your creditworthiness.
When you apply for a private student loan, the lender generally performs a hard credit check to pull your credit report. This is a detailed record of your borrowing history. They use this information to decide if you're eligible to apply and to set lending terms.
Some lenders offer student loans designed for those with lower tier credit scores, though terms, conditions and products vary by lender.
What credit score do I need to co-sign a student loan?
There isn't a single universal credit score to co-sign student loan applications. Each lender sets its own guidelines and reviews your overall financial profile. Many lenders use scoring models like VantageScore® and FICO® to evaluate your profile. These scores are calculated using information from the three major credit bureaus: Experian™, Equifax® and TransUnion®.
Lenders look at more than just your score. They may also consider your income and your debt-to-income ratio, which compares how much you owe to how much you earn. Because of this, a co-signer with a lower tier credit score but demonstrable income might still be eligible for certain loans.
If you aren't sure where you stand, there are various free tools available, such as Chase Credit Journey®, to access your credit score. Credit Journey®, powered by Experian™, is a free online tool available to both Chase and non-Chase customers. It is designed to help customers better understand and manage their credit score and credit goals. Customers can access their credit score anytime with no impact to their credit, receive credit tips to help improve their score, and get identity monitoring—all in one place and for free.
Alternatives to co-signing a student loan with bad credit
For those exploring alternatives to co-signing a private student loan, other education funding options may be available.
Federal student loans
As mentioned earlier, federal student loans may be a good choice for some borrowers. Students can apply by filling out the Free Application for Federal Student Aid (FAFSA).
- Direct subsidized loans: These are based on financial need, and the government pays the interest while the student is in school.
- Direct unsubsidized loans: These are available regardless of financial need, though the student is responsible for paying all the interest.
Building your credit
For students who are not yet ready to borrow, financial management strategies may help to build a credit profile over time:
- Reviewing your credit report: Monitoring your credit report may help you spot errors. Disputing errors or inaccuracies that might be lowering your score could help improve it.
- Making on-time payments: Payment history is a major factor in your credit score depending on the scoring model. Consistently paying bills on time may help raise your score over time.
- Lowering your credit utilization: This is the amount of credit you're using compared to your total available credit. Paying down existing balances may help lower your credit utilization.
In summary
Having a lower tier credit score may affect your ability to co-sign a private student loan, but requirements vary by lender. Lenders may consider factors including credit history, income and debt-to-income ratio when determining eligibility and loan terms. Borrowers and families may also wish to review federal student loans and other funding options.
