Federal student loans should be your first choice for borrowing with no or bad credit. But if there’s still a cost gap to fill, consider private student loan options without credit score requirements.
Summary of Student Loans for Bad or No Credit: Compare Options for 2020
|Lender||Fixed APR||Variable APR||Min. Credit Score||Learn More|
Federal Subsidized/Unsubsidized Loan
4.53 - 6.08%
Ascent Private Student Loan
4.21 - 13.16%
3.16 - 11.90%
MPOWER Private Student Loan
7.52 - 13.63%
How to shop for a student loan when you have bad or no credit
- Start with federal student loans. Fill out the Free Application for Federal Student Aid, known as the FAFSA to apply for federal student loans as well as qualify for free aid such as grants, scholarships and work-study. They offer lower interest rates and come with income-driven repayment plans and forgiveness programs.
- Find a co-signer with good credit. To borrow private loans with a co-signer and get the most competitive interest rates, they’ll need to have a good credit score and steady income. If you opt for a co-signer, they’ll be responsible for your debt if you can’t repay it.
- If you can’t find a co-signer, consider loans you can get independently. Some lenders offer private student loans without factoring in credit scores. Future income potential is usually considered instead. The higher your earning potential, the more likely you are to get competitive rates.
- Compare loan features. When shopping for a private loan, compare offers to get the lowest interest rate you qualify for. Note whether the lender will postpone payments in case you have difficulty affording them, and for how long. That’s important. Find out if there are origination, prepayment or late fees, and how easily you can reach the lender by phone, email or live chat if you encounter a billing or customer service issue.
- Opt for a fixed interest rate. Given the choice, a fixed interest rate is a safer bet than a variable interest rate. It won’t increase over time.
- Keep an eye on the bottom line. Use a student loan calculator to see what kind of payment you’ll face after borrowing for multiple years.
- Consider refinancing in the future. Once you’re out of school and have built a credit profile, you may be able to refinance private student loans to a lower interest rate. You’ll generally need solid income, a credit score of 690 or higher and a history of on-time debt payments.
Last updated on February 18, 2020
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