Your credit score is like the report card of adulthood, except it’s one number based on your creditworthiness, as opposed to letter grades. As a college student, having a bad credit score isn’t optimal when it comes to securing a private student loan.
However, don’t lose hope just yet. You still have a variety of options to choose from. Check out this quick read to see the best private student loans for student borrowers with bad credit history.
Best Private Student Loans for Bad Credit
First, here’s is a list of the top 5 student loans for bad credit. Rather than searching for lenders one-by-one, we recommend starting the process with an automated student loan search tool. After you complete the free Sparrow form, we’ll show you the rates and terms you’d pre-qualify for with 17+ premier lenders.
>> MORE: Compare your personalized rates for student loans with bad credit
Can You Get Student Loans with Bad Credit?
Yes, you can still receive student loans with bad credit. Bad credit doesn’t automatically disqualify you from receiving a student loan, though the eligibility criteria may vary between loan options.
Federal Student Loans
Federal student loans will be your best option if you have a bad credit store. They are issued by the federal government and are extremely borrower-friendly.
Federal student loans don’t assess your credit score in most cases and come with income-based repayment options, loan forgiveness, and deferment options.
In addition to having flexibility as a borrower, federal student loans also carry a flat interest rate that is typically lower than the interest rates offered by private student loans. This means that interest rates are the same amongst all student borrowers, regardless of credit score.
In order to receive a federal student loan, make sure you meet the eligibility requirements and submit your FAFSA application.
>> MORE: Student loan eligibility: Private and Federal loans
Private Student Loans
Receiving a private student loan can be more challenging, and you’ll need to be deliberate with your actions.
- Find the best private student loan for yourself on the market. You should consider interest rates, repayment options, origination fees, and whether or not these loans are enough to pay for your tuition. Submitting formal applications to multiple private student lenders can damage your credit score temporarily (this is called a hard inquiry), and this is a risk you should not take. Instead, use Sparrow to see what loan options you can get with premier lenders without damaging your credit score. We help borrowers with bad credit find a loan that suits them without hurting their credit.
- Consider getting a creditworthy cosigner. A cosigner is an individual, usually a family member or friend, who is responsible for the loan with you. If you can’t or do not repay the loan on-time or in-full, the cosigner is contractually obligated to do so. If you have a bad credit score, having a cosigner is useful because it reduces your risk profile as a borrower. Accordingly, this allows you to have a wide array of loan options with lower interest rates. Though there are loans that don’t require a cosigner, having a cosigner boosts your chances significantly in getting a private student loan.
- Explore outcome-based private student lenders who evaluate metrics outside of your credit score. There are private student lenders who do not evaluate credit score, and instead look at your academic performance, major/school, and future income potential. Ascent, Edly, and Funding U are popular outcome-based lenders that are accommodating to students.
The latest rates from Sparrow’s partners
If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking Apply below.
What is Considered a Bad Credit Score?
FICO and VantageScore are the two leading scoring models to measure credit, though FICO is the most widely used scoring model and used by 90% of lenders.
Payment history (35%)
This is the most important factor of your FICO score. Your credit history is your record of payments in past credit accounts and assesses your punctuality in payments (or lack thereof).
Amounts owed (30%)
This is the second most important factor of your FICO score. If you have outstanding amounts of money to pay back (ex. You have a $1,000 credit line and you’ve used $900), this can indicate to lenders that you are overextended in your finances.
Length of credit history (15%)
Though you don’t need a long credit history to have a high FICO Score, your credit history takes into account the following items:
- When your credit accounts were created (your oldest account, your newest account, and the average age of all your accounts)
- Usage of certain credit accounts
- Longevity of specific credit accounts
Credit mix (10%)
There are two types of credit accounts: revolving accounts and installment accounts.
Revolving accounts are credit accounts that have flexible repayment plans and options, like credit cards, HELOC (Home Equity Line of Credit), retail store accounts, and gas station cards.
Installment accounts consist of mortgages, auto loans, and student loans.
Having a varied credit mix improves your FICO score, as it shows that you don’t have a limited credit experience. However, this doesn’t mean that you should try to open different types of credit accounts.
Your credit mix is largely dependent on your age, socioeconomic status, and other factors, so it won’t determine whether or not you obtain credit from lenders.
First and foremost, your payment history is the most influential factor for your credit score, so focus on paying your dues on time.
New credit (10%)
Opening multiple credit accounts in a short period of time is a red flag for lenders and can have negative effects on your credit score. Be sure to demonstrate reliability and creditworthiness with the credit lines you have open, instead of opening multiple accounts.
FICO considers a credit score to be poor if it falls below 580, fair if it ranges between 580-669, and good if it falls between 670-739.
What Can I Do to Raise My Credit Score Before Getting a Student Loan?
Though there is no magical quick fix to raise your credit score substantially in a short period of time, you can still raise your credit score by your next credit report with the following steps:
- Pay your bills on-time.
- Pay off any outstanding debt.
- Hold off on opening new lines of credit.
- Don’t close your current credit card accounts.
- Check your credit report to assure that there is nothing incorrect or fraudulent.
>> MORE: How to improve your credit score
More Private Student Loan Options for Bad Credit:
For Undergraduate Private Student Loans
Funding U
Funding U is an online lender that focuses exclusively on undergraduate students with no cosigner. Rather than looking at your credit score or income, Funding U looks at non-traditional metrics such as your school, major, GPA and estimated future earnings to assess your creditworthiness. Therefore, Funding U’s student loan is best if you are a high-achieving undergraduate student with limited credit history and no creditworthy cosigner
For Undergraduate & Graduate Private Student Loans
Arkansas Student Loan Authority
The Arkansas Student Loan Authority (ASLA) is an Arkansas state entity that provides educational funding for all Arkansas students who wish to attend higher education institutions. In order to qualify for a student loan with ASLA, you need a credit score of above 670. ASLA is a great option for Arkansas students.
Ascent – Cosigned Loans & Non-Cosigned Loans
Ascent is an online lender that offers educational funding for students. They offer three types of student loans: a traditional cosigned loan, a non-cosigned credit-based loan, and a non-cosigned outcomes-based loan. Collectively, the three options provide a great selection for those who do not have a cosigner available, are international or DACA students, or have lower credit scores. Ascent’s minimum credit requirement varies based on the loan.
Brazos
Brazos is a non-profit lender offering educational funding through private student loans available only to Texas Residents. They offer a wide range of loan options, covering undergraduate, graduate, MBA, law, medical, dental, veterinary, and doctoral degree programs. Brazos does not disclose their minimum credit requirement. Brazos is a great option if you live in Texas and want competitive interest rates.
College Ave Student Loans
College Ave Student Loans offers educational funding for undergraduate, graduate, professional, and career school students, and parents of students. In order to qualify for a student loan with College Ave, you will need a credit score in the mid-600s. College Ave is a great option if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget.
Earnest
Earnest’s student loans provide funding to undergraduate, graduate, and professional students. In order to qualify for a student loan with Earnest, you will need a credit score of 650. They’re a great option if you are seeking competitive interest rates, unique borrower perks, and flexible repayment options that allow you to find a loan that matches your budget.
Edly
Edly Income-Based Repayment (IBR) Student Loans, originated by Edly’s partner FinWise Bank, provide an alternative loan option for students. Students who are approved for an Edly student loan will not have to make payments while in school. Instead, borrowers make payments after graduation based on their income. Due to the structure of IBR loans, borrowers have a variety of benefits when it comes to repayment. Therefore, an Edly IBR loan is best if you are seeking a loan option with no cosigner, competitive repayment terms, and flexible repayment options.
LendKey
LendKey is an institution that offers educational funding to undergraduate and graduate students. By connecting borrowers with a network of 100+ lesser-known credit unions and community banks, LendKey allows you to work with smaller lenders with low rates and good customer service, rather than traditional lending institutions. LendKey has a minimum credit requirement of 660. It’s best for students who want generous cosigner release and forbearance policies.
MPOWER
MPOWER is an online lender that offers educational funding to international, domestic, and DACA students. They offer non-cosigned undergraduate and graduate student loans. Specifically, it is best for international students and DACA students who don’t have a cosigner or a credit history.
Prodigy Finance
Prodigy Finance is an online lender that provides funding to international students. They offer non-cosigned graduate student loans. Accordingly, they’re a good option for international students who don’t have a credit history and can’t access a qualified cosigner.
Sallie Mae
Sallie Mae is an online lender that provides educational funding to students. They offer cosigned and non-cosigned undergraduate, graduate, and career training student loans. In order to qualify for a student loan with Sallie Mae, you must have a credit score in the mid-600s. They’re a good option for students seeking competitive interest rates with a creditworthy cosigner.
Student loan rates from our partners
Ascent
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 11/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 11/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
LendKey
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
Earnest
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
College Ave
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Closing Thoughts from the Nest
Having a bad credit score as a student can be extremely disadvantageous. Raising your credit score should be an important priority if you plan to take out student loans, open new lines of credit, and more.
However, there are still student loan options available to you, even if you have a bad credit score. Start thinking ahead about where your credit is at, and if it’s not ideal, start taking small steps to build it. In order to find a private student loan for students with bad/no credit, complete the Sparrow form today.
Remember to research federal student loans and outcome-based, borrower-friendly student loans. When looking for private student loans, remember to be deliberate with your actions (think about the effects of hard inquiries on your credit score, consider getting a cosigner, and make an effort to raise your credit score).
On top of that, apply to college scholarships and grants to fill the gaps in college costs.
Sparrow’s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.