How Does My Credit Score Affect My Ability to Get a Student Loan? (2024)

FAQs

How Does My Credit Score Affect My Ability to Get a Student Loan? ›

In addition to meeting general requirements for student loan eligibility — such as completing your FAFSA — Direct PLUS Loans are the only type of federal student loan that requires a credit check. The amount you can borrow isn't determined by your credit score but by the school's cost of attendance.

Federal student loans don't have minimum credit score requirements, and most of them don't require a credit check. Minimum credit score requirements for private student loans vary by lender. You generally need a good credit score — often defined as a FICO score 670 or greater — to qualify for a private loan.

When you apply for a loan, reputable lenders will check your credit. The higher your score, the more likely you are to get approved, and the lower your interest rate will be. If you have a score less than good (under 670), you likely won't get approved by most lenders.

The riskier you appear to the lender, the less likely you will be to get credit or, if you are approved, the more that credit will cost you. In other words, you will pay more to borrow money. Scores range from approximately 300 to 850.

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.

Among our partner lenders, you'll need a credit score of at least 670 to qualify for a private student loan, although some lenders don't disclose their minimum credit score requirements. However, the higher your score, the better. Most lenders will give you better rates and terms if your score is at least 700.

If you're an undergraduate student with bad credit, don't let that stop you from applying for federal financial aid — your credit score won't matter. This is slightly different for graduate students and parents applying for federal student loans, though receiving loans is certainly not impossible.

Loan Eligibility and Interest Rates

Credit scores directly impact your loan eligibility and the interest rates you are offered. Lenders typically have specific credit score requirements, and borrowers with higher credit scores are more likely to meet those criteria.

Income and the amount of debt you already have can also be reasons a lender may reject your loan application. You can improve your chances of getting approved by increasing your credit score, getting a co-signer, or providing collateral.

Maybe you have a bad financial association and too much existing debt. Perhaps your salary is listed differently in two records, or you once missed a credit card repayment. It could be tricky to pin down the cause of a denied credit card or loan application, even with a good credit score.

Will my bank give me a loan if I have bad credit? ›

Secured, co-signed and joint loans are the easiest to get with bad credit. A secured loan requires collateral like a car or savings account, which the lender can take if you fail to repay. A co-signed or joint loan requires you to add someone with better income and credit to the application.

The information in your credit report affects your ability to get a loan, an apartment, and many other important things in your life. You want to make sure that what's on your report is right.

Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type. Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years.

If you don't meet baseline eligibility requirements, or if you've previously defaulted on a loan, you may not be approved for a federal student loan. You must maintain "satisfactory progress" in school to be approved for student loans. You can take steps to regain or improve your eligibility for student loans.

Your credit history, credit score, insufficient application information, or other issues could cause you to be rejected for a loan. If you were denied a student loan, you still have options. This guide will show you some steps to take when your loan application is denied.

Lenders may look at your employment history, credit score, debt-to-income ratio, and enrollment status at your school. One of the most common reasons why a student might not qualify for a private student loan is because they don't meet their lender's FICO^® Credit Score criteria.

Eligibility Requirements. Our general eligibility requirements include that you have financial need for need-based aid, are a U.S. citizen or eligible noncitizen, and are enrolled in an eligible degree or certificate program at an eligible college or career/trade school.

For this reason, lenders often require a minimum credit score between 650 and 700 for a private student loan. If you don't have a credit score of at least 650, you'll likely need to add a creditworthy cosigner to your loan.

Being denied student loans is common for would-be borrowers, and several factors could lead to loan denial. Your credit history, credit score, insufficient application information, or other issues could cause you to be rejected for a loan.

Federal student loans usually don't require a credit check, making them easier to get for most students. However, private loans often require a good credit score, a minimum income and at least half-time enrollment in an eligible institution. If you don't meet these criteria, a cosigner may be necessary.