If you’re considering your next step in your education but aren’t sure if your bad or poor credit may impact your journey, there is a light at the end of the tunnel. In short, yes — you can get student loans with bad or poor credit, sometimes even with no credit. You may be wondering if there are certain restrictions when it comes to student loan qualifications. We’ll explore types of student loans, credit scores and how they’re related.
Do you need good credit for student loans?
You don’t necessarily need good credit for student loans, but a lack of solid credit may limit your choices. Credit scores range from 300 at their lowest to 850 at the peak. These three-digit numbers are calculated by industry models based on your credit behavior. That means the way you have used credit accounts like credit cards or other types of loans.
If you’re in high school or are pursuing higher education after some setbacks, you may not have much (or any) experience with these. But there’s no need to worry — there are steps you can take to establish good credit.
Can you get a student loan with no credit history?
As stated above, you can get a student loan without a credit history. You can earn your way bit by bit thanks to some beginner best practices. These can include the following:
- Become an authorized user on a credit card in good standing. Perhaps on a credit card account of an established user, like a parent or family member. Sometimes you can get your own card in order to establish your credit behavior as distinct from the primary user.
- Get and use an unsecured credit card. There are student credit cards as well as retail store credit cards. When using these types of unsecured credit cards, you may find it helps to spend only in amounts you can most easily pay each month because they tend to charge interest rates in higher-than-average ranges.
- Establish credit with a secured credit card. Another type of starter card, you secure these cards with pre-payment. So, the funding already awaits on the card. You replenish the funds as you spend the money. This often leads to the lender granting credit to you after you establish some proven payment history.
Strategies for how to get a student loan with bad or poor credit
No matter what your credit situation is, lack of funds doesn’t have to keep you out of the college classroom. Here are some helpful tips for securing a student loan.
- Find a co-signer with a steady income and good credit. Keep in mind that if you neglect to pay back your student loan, this co-signer will become responsible for what you don’t repay.
- Start with a federal loan. The FAFSA (Free Application for Federal Student Aid) works like a gateway to federal student loans as well as many work study programs and grants.
- Apply for grants. These are often merit and/or need-based monetary awards that are often contingent upon staying enrolled and sometimes maintaining a minimum GPA.
- Search for a private loan with no credit score requirement. Many of these are contingent on your future income potential.
You may want to shop for student loans using an online loan calculator and other handy tools to help cut through the vast landscape of lenders. Here are some features to consider when choosing a student loan:
- Fixed rate: Variable rates can change over time. With a fixed rate, what you see is what you get throughout the life of the loan. These types of rates may not always represent the lowest interest, but they are definitive for the term of your loan.
- Low rate: If you’re exploring loans with variable interest rates, the lower the rate you find, the less cost will accumulate on top of the principle you may owe over time.
- Fee structure: Fees can accumulate. So, it can help save you money to investigate the details of their service fees. There are many online reviews specific to student loans with help from seasoned student loan holders.
- Customer service availability: Another helpful research topic, customer service can make a big difference in your student loan adventure. So, why not check out the services available before committing?
Types of student loans
Student loans come in several various types. Each kind has distinct qualification requirements, drawbacks and benefits. Some even open the door to other types of financial aid. So, let's break them out here with some distinct factors to help you choose what’s right for you.
- Federal student loans don’t usually require a credit score and typically offer low fixed interest rates. However, they provide limited funds. So, it’s unlikely you can pay for all your college costs with just federal student loans.
- Private independent student loans vary in what they offer. So, you may want to research before applying for these. That’s because some can have a credit score requirement and/or a variable interest rate, meaning you could be charged a higher rate in the future because it can change whereas a fixed rate stays the same.
- Income share agreements are also student loans, but the payments work a bit differently. Instead of an interest rate percentage of your borrowed amount, you agree to pay this loan back with a percentage of your post-graduation income.
Can you refinance student loans with bad credit?
Planning ahead can help you manage your student loans. For instance, many students find it helpful to refinance student loans after graduation. After all, it would likely be harder to refinance student loans with bad credit. So, to prepare for the refinancing process, you may want to work toward improving your credit score during college.
Chase Credit Journey® can help with this because they can put credit building tools and resources right in the palm of your hand. Thanks to features like free credit score checks, credit monitoring and credit report alerts, Chase Credit Journey® works to help you take steps toward a better credit future.
Bad credit doesn’t have to hold you back from attending college. That’s because you can get student loans with bad credit and even no credit in some cases. Best of all, there are refinancing options available after graduation as well. So, why not work toward a better credit score in your school years? That could help you secure your best possible refinance rate as a graduation gift to yourself. Chase Credit Journey® has the tools and resources to help guide you along the way.