Student Loans for Bad Credit: If you need college funding, but you have bad credit, you might wonder if you can get loans for students. The good news is that most student loans from the federal government do not require a credit check, with one exception being direct plus loans.
But if after exhausting your federal loans you need more funding for education, private student loans can be your next choice. Financial institutions providing private student loans need a credit check, so it may be difficult to get approved if you have bad credit.
If you’re looking for student loans for bad credit and need options, here are things you should know.
Try To Get A Cosigner
As with any type of loan, if you need extra funding for your education, having bad credit poses some problems. If you’re looking to apply for low-credit private student loans, you’ll need a co-signer to be approved.
Many private loans also need a co-signer, but this is especially the case when it comes to less-than-stellared loans. According to data from the Consumer Financial Protection Bureau, 90% of private loans have a cosigner.
A cosigner is a person who is legally in charge of the loan. Cosigners use their good credit in many situations to help the primary borrower (i.e., you) get loan approval. But if you fail to pay, for repaying the loan, the cosigner is on the hook.
It is very important to find someone who feels comfortable with this arrangement because of the legal natureof co-signing a loan. A cosigner is typically a member of the family or a spouse.
To prevent jeopardizing your marriage, make sure that you are both on the same page about who is responsible for the loan in advance. Getting a co-signer with a strong credit score, say 700 or higher, will increase your chances of receiving private student loan approval.
If you have a cosigner and are looking for student loans for bad credit, here’s where you can start your search:
LendKey connects borrowers with community banks and financial institutions to offer the best rates. You can apply for the competitive interest rates with a cosigner to boost your chances of approval.
CommonBond also offers private student loans and has a cosigner release option after two years of payments. That way, if you apply with a cosigner, you can have them removed from the account later on once you’ve demonstrated you’re a responsible borrower.
Citizens Bank has private student loan offerings, and applying with a cosigner can help you get approved. Citizens Bank offers cosigner release after making 36 payments.
Credit unions may offer private student loans to borrowers with less-than-great credit if you have a cosigner. Research the options in your area with ASmarterChoice.org.
What to do if you don’t have a cosigner
Finding a cosigner may not be easy. You’re basically asking someone to take on the legal responsibility of your loans — and that’s a lot to put on someone. If you can’t find a cosigner, don’t give up hope yet.
There are some private student loans without a cosigner that might be available to you, even if you have bad credit:
Ascent offers student loans but doesn’t necessarily require a cosigner. According to the Ascent website, “Ascent considers several factors, including: creditworthiness, school, program, graduation date, major, cost of attendance, and other factors that allow for students to potentially obtain a loan in their own name without a cosigner.”
MPOWER Financing offers international students student loans without a cosigner. You can check your eligibility in one minute to see if you qualify.
Checking out these two options may give you a better chance at approval if you don’t have a cosigner.
If you have bad credit and need private student loans, be mindful of where you apply. Check the eligibility requirements and see if there are any stated credit score requirements.
If you are unsure if you will be accepted, consider applying in a short time (within approximately two weeks) to multiple lenders. This short time frame could only enable the applications to be listed on your credit report as a single hard inquiry.
Strong pulls on your credit will raise a red flag for lenders and cause your credit score to drop slightly, so avoid them as much as possible. Be mindful of your loan application strategy, particularly if you are facing bad credit challenges already.
Tips for improving your credit
Applying for bad credit student loans can be frustrating if you need the money, but don’t know if you’re going to be accepted. Make sure all your payments are made on time to improve your credit.
Hold your balance below 30 percent of your credit limit if you have a credit card. You can turn your credit around if you also restrict new credit inquiries and maintain consistent positive lending habits.
Look at student loan refinancing for better interest rates on your student loans as your credit improves. Regardless of your current situation, there are options out there when it comes to private student loans and bad credit.
You are not doomed to have bad credit forever, and with later refinancing you may be able to get better rates.