Best Student Loans for
Bad Credit or No Credit

Federal Students Loans

Federal students loan do not require a credit check. If a student needs help with tuition, room and board, or living expenses, the student simply needs to fill out a FASFA form and make a loan request for the amount they need. Each student has a maximum loan amount that they can receive at any given point. If a student reaches this limit, they would need to pay off some of the student loans to qualify for additional loans. There are thresholds for both undergraduate and graduate studies. Loan limits had not increased in over 15 years until recently, so these loans may not cover the full cost of education, considering the cost increases that have occurred over the last 15 years.

Private Student Loans

If you need funds in excess of federal student loans, or you’ve maxed out the limit of federal student loans you can have, private student loans are also an option. Another time private loans could be an option is if a student is attending a school that isn’t accredited and therefore federal student loans cannot be used to pay for tuition or expenses. Private loans require a credit check and a creditworthiness score. If a student has decent credit, then qualifying for the loan shouldn’t be too difficult, but if they have bad credit, there’s still a chance the loan won’t be approved.

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Applying for a Loan with Bad Credit

If, after grants and federal student loans, you still don’t have enough to cover your expenses and tuition, seeking a personal loan to cover the remainder is an option. If your credit is bad or you don’t have any credit to begin with, there are certain places where you can apply that might be able to help with your funding needs. We have detailed some steps and advice below to help you find the financing you need to continue your education.

Do Your Research

When you seek a personal loan for any reason, it’s important that you do your research. You want a loan that will not just provide you with the money you need in the short term, but also a loan that you’ll be able to pay back without accruing more interest or fees than necessary. Look for loans with lower interest rates and longer payback terms with smaller monthly payments. If you can pay the loan back early, that’s better than struggling with a loan payment that you might not be able to afford. You’ll also want to find loans that don’t require repayment right away. Being able to take a month or more after graduation to find a job before starting a repayment plan is better than having to start repaying a loan while you’re still in school. Many lenders have loan calculators on their sites so you can determine what your loan repayment terms might be depending on the length of time, the amount financed, and the interest rate. If your credit is less than perfect, your interest rate is going to be higher and that means a higher monthly loan payment.

Co-Signers

One way to get a better loan term is to have a co-signer. This is a person who agrees to be responsible for the loan in the event that you default. Co-signers typically have good or excellent credit as well as ample income to afford the loan. It’s important to note that the co-signer is the backup party responsible for the loan. As the person who needs the funding, you are primarily responsible for repaying the loan. Defaulting on the loan will hurt your already damaged credit as well as damage your relationship with your co-signer.

Provide Proof of Income

As part of the loan application process, you’ll have to show you have income. Providing proof of income shows the lender that you have the ability to make loan payments when it is time to repay the loan. Income verification is especially important if the loan payments are due before you finish school. The more income you can prove, the better the chances of getting approved for a loan with a decent interest rate. If you are a full-time student, it may be up to your co-signer to provide proof of income

Talk to a Credit Union

When you start looking for a loan, you might want to consider starting small and starting local. If you have a local bank you deal with (checking or savings accounts, for example), applying for a loan through them could work, especially is it’s a relatively small bank. A smaller local bank might be more willing to take a risk on a loan for a local person than a large corporate bank might be. Another option is applying through a credit union. Credit unions often help their members when other banks will not. If joining a credit union is an option, you might want to consider going that route to attain the additional funding you need.