Federal loans should be your first priority if you are looking for a student loan. The Federal Government provides loans to those students who want to go for higher education and needs money for the same. But due to any reasons, if the federal government denies your student loan request, there are other lenders as well, who can provide you with student loans for bad credit.
In this article, we are going to tell you about the top 7 lenders which provide student loans with bad credit or zero credit history people. We have selected these lenders on the basis of their reputation, interest rate, loan term, loan amount, etc. So now let’s get deeper into this.
What are Student Loans for Bad Credit?
Student loans for bad credit are those loans, which are provided to students with a bad credit score or no credit history at all. These loans are basically given to the students to complete their education. And once the borrower starts earning by completing the education, they need to repay the loan along with the interest.
There are 2 types of student loans:
- Federal Student Loan
- Private Student Loan
Federal student loans are provided by the federal government, whereas private student loans are given by private lenders.
Top 7 Student Loans for Bad Credit
In this section, we are going to tell you about the best student loans with bad credit. We will also help you with its merits and demerits so that you can decide if the student loan is ideal for you or not.
1. Federal Student Loans
Our Rating: 5/5
Federal loans are the best, especially for students. The federal government provides low-interest student loans to students who need financial aid for their studies. Since you are getting the loan from the government, there are no chances of fraud. Where the main motto of private student loan providers is to increase their business and make good profit, the main motto of federal student loans is to provide financial help to students so that they can have a good career and future. The government conducts a soft credit inquiry before giving you a student loan and they also offer several payment options.
Important Points
- Minimum Required Credit Score: 0
- Minimum Required Annual Income: $0.00
- Loan Amount: $1,000 to $500,000
- Fixed APR: 3.37% to 6.28%
- Loan Term: Up to 10 years
Pros
- Chances of loan forgiveness
- No minimum credit score is needed
- Low APR
- Low-interest rate
- Option to repay the loan once you start earning
Cons
- Not everyone easily gets a loan from the federal government.
- High origination fee.
- The loan amount is low for undergrads.
2. Ascent
Our Rating: 4.3/5
Do you know what is the best part about the Ascent student loans? You do not need a co-signer. You can get this loan on your own. Ascent provides you with student loans for bad credit on the basis of your field of study, which means that if you need financial aid to study a course that can help you get a high-paying job in the future, Ascent will provide you with a student loan. If you want a loan with low interest, then you will need a co-signer. You can also get a student loan without a cosigner, but then the interest rate would be high.
Important Points
- Minimum Required Credit Score: Not known
- Minimum Required Annual Income: $0.00
- Loan Amount: $2,000 to $200,000
- Fixed APR: 4.62% to 16.75%
- Loan Term: 5 to 10 years
Pros
- They offer you cash back and rewards when you graduate.
- Discounts on paying the loan amount earlier.
- Both co-signer and non-co-signer student loan options are available.
- No minimum annual income is required.
Cons
- The maximum loan amount can be low for some courses.
- They have not mentioned their minimum requirement for credit scores.
- The interest rates are high for non-co-signer loans.
3. Funding U
Our Rating: 3.2/5
The best part about Funding U student loans is, they do not even look at your credit score. They provide you with a student loan on the basis of your previous academic achievements. So if you are looking for bad credit student loans, Funding U is ideal for you. They give you a loan by trusting your academic capabilities and not your current credit score. If your credit score is not good, and you do not have a cosigner, you can still get this loan. The only issue is, they have not mentioned some important details like loan terms and fixed APR, you will only get to know about them, once you apply for the loan.
Important Points
- Minimum Required Credit Score: Not known
- Minimum Required Annual Income: $0.00
- Loan Amount: $2,000 to $200,000
- Fixed APR: Not known
- Loan Term: Not known
Pros
- No co-signer is required.
- No credit score is required.
- They give you student loans by trusting your academic capabilities.
Cons
- Important details like APR and loan terms are not available.
- Low annual loan amount.
- They do not provide lending services in all the US states.
4. College AVE Private Student Loan
Our Rating: 3.0/5
If you are planning to go for a long education and need a long-term loan so that you can get enough time to repay your loan after completing your education then College AVE Private Student Loan is a good option for you. They also allow you to release your co-signer, as soon as you repay half of the loan amount. But you will need a slightly above-average credit score to get this student loan.
Important Points
- Minimum Required Credit Score: 300 to 600
- Minimum Required Annual Income: $35,000
- Loan Amount: N/A
- Fixed APR: 3.99% to 14.96%
- Loan Terms: 5 years, 8 years, 10 years, and 15 years.
Pros
- You can apply for pre-qualification.
- Flexible loan repayment terms are available.
- You get an opportunity to release your co-signer after repayment of the half loan amount.
- A 6 month grace period is available.
Cons
- You need to have at least $35,000 annual income in order to get this student loan.
- A higher credit score is needed.
- The loan amount is low.
5. Prodigy Finance
Our Rating: 3.0/5
Prodigy Finance provides student loans to foreign students who fail to qualify for federal loans. Basically, the head office of Prodigy Finance is in London, but they provide loans to international students who move out of their native country for a master’s program. The loan amount and interest rate depend on the course and country where you are going for your higher education.
Important Points
- Minimum Required Credit Score: None
- Minimum Variable APR: 9.54%
- Minimum Loan Amount: $15,000
- Average Variable APR: 13.23%
- Loan Terms: 7 years to 20 years
Pros
- Good for international students
- Several repayment options are available
- Not available in some countries.
- High maximum loan amount
Cons
- Only variable interest rates are there
- High orientation fee
6. A.M. Money Private Student Loan
Our Rating: 4.5/5
If you do not have a cosigner but you are an excellent academic performer then you can definitely go with A.M. Money Private Student Loan. It is one of the best student loans for bad credit. The best part is, your loan eligibility is decided on the basis of your academic qualification and achievements and not on the basis of your credit score or co-signer. The only problem you might face is, this student lending service provides student loans for a limited number of schools and colleges.
Important Points
- Minimum Required Credit Score: None
- Fixed APR: 7.53% to 8.85%
- Loan Amount: $2,000 to 50,000
- Minimum required annual income: $0.00
- Loan Term: up to 10 years
Pros
- You do not need a co-signer.
- Your loan eligibility is decided on the basis of your academic performance.
- The interest rate is the same for all students.
Cons
- Provides loans for a limited number of schools and colleges.
- Orientation fees are there.
- They do not allow for autopay.
7. MPower Student Loan
Our Rating: 4.0/5
The interest rate of the MPower Student loan is comparatively high, but we would say that it is totally worth it because they provide loans to international students living in the USA as well as U.S. students, who want to go abroad for further studies. They provide you loans not on the basis of your credit score or co-signer but on the basis of your future job potential.
Important Points
- Minimum Required Credit Score: None
- Fixed APR: 7.52% to 13.63%
- Loan Amount: $2,000 to 100,000
- Minimum required annual income: $0.00
- Loan Term: 10 years
Pros
- Provides loans to international students.
- You get a loan advisor to select, which loan would be perfect for you.
- You do not need a cosigner for your student loan.
Cons
- There is only one loan repayment period, which is 10 years.
- The APR is high.
Income Share Agreement: An Alternative
Have you heard about the Income Share Agreement? It is basically an alternative to student loans for bad credit. Instead of giving a loan and then defining a loan repayment period, the lender makes an agreement with the student. Under this agreement, they mention that they are giving a particular sum of money to the student and once he or she starts earning, will have to share a particular percentage of income with the lender.
These days, income share agreements are getting very famous, and lenders give these loans only to students with excellent academic performance, where they are sure that the student will get a really good job in the future. The student has to share their income until they completely repay the borrowed money, along with the interest charge. Companies like Edly and Stride Funding lend money to students under Income Share Agreements.
Who is a Co-Signer?
A co-signer is basically a person who signs on your student loan along with you. It is someone who takes the responsibility of repaying your loan, in case you fail to do so. It can be anyone, your parents, your friend, or a family member who has a good credit score and can repay your loan on your place if needed.
If you are a student with a bad credit score, then you will probably need a cosigner to get a student loan. There are several lending companies that provide both co-signer and non-co-signer student loans for bad credit, but the interest rates of co-signer student loans are comparatively low.
Federal Student Loan Vs Private Student Loan: Which is Better?
To understand which loan is better, first of all, you will need to understand their difference. Federal student loans are offered by the federal government, whereas private student loans are provided by private companies.
The main purpose of private student loan providers is to increase their business and make good profit, whereas the main purpose of federal student loans is to provide financial help to students so that they can have a good career and future.
Hands down, federal student loans are much better than private student loans because, with federal loans, there are no chances of fraud, and the interest rate of federal loans is low. Also, there are chances of loan forgiveness with federal loans.
How to Improve Credit Score for a Student Loan?
In this section, we are going to give you tips to improve your credit score, so that next time whenever you need a student loan, you do not have to search for Student loans with bad credit, you can simply grab the best deal available.
1. Pay Your Bills on Time
Do you know that your bill payment makes up 30% of your total credit score? So if you want to improve your credit score, you will have to start paying the bills on time or even before time.
2. Repay all the Debts
To improve your credit score, you will have to repay all the loans on time. Otherwise, it will affect your credit score negatively.
3. Get a Student Credit Card
If you are a student with zero credit history and need a credit card to build your credit score then you can definitely get a student credit card. A student credit card is best to start your credit journey with, it gives a good boost to your credit score.
4. Pay the Loans and Bills Early
Paying your bills and loans before the due date gives you extra credit points. So if you want to improve your credit score, start paying the bills and loans before the due date.
How to Get the Best Student Loan for Bad Credit?
In order to get the best student loan for bad credit, you can follow the tips given below.
1. Make Federal Loans Your First Priority
First of all, you should apply for a federal student loan. Because as we told you, these are low-interest loans with good loan terms. There are also chances of loan forgiveness, fully or in some percentage.
2. Look for Other Options
If you fail to get a federal student loan, then you can start your search for private student loan lenders. See which company provides student loans in your area or locality.
3. Compare the Interest Rates
Compare the interest rates, fees, and other terms of all the loans for which you can qualify. By this, you will come up with a lender, who can provide you with a loan at a low-interest rate.
4. Check Ratings and Reviews
Before making the final call, make sure that you check the ratings and reviews of the online lender you are trying to get a loan. Since you are a student, some fake student loan companies might try to catch you in their trap by offering student loans with extremely low-interest rates.
Frequently Asked Questions (FAQs)
Q1. Can I get approved for a student loan with bad credit?
Yes. Most student loan lenders provide loans for students with bad credit. Even the federal government provides loans to students with a bad credit score or no credit history at all. If your credit score is bad then you can go for private lenders like Funding U or Ascent.
Q2. What is the minimum credit score for a student loan?
If you have a credit score of 300 to 500 then you can crack very good deals in student loans, but there is no minimum credit score required for a student loan. Many companies like A.M. Money Private Student Loan and MPower Student Loan provide loans to students with bad credit scores or no credit history at all.
Q3. Can I get a student loan with no credit check?
Yes. You can get a student loan with no credit check. Companies like A.M. Money Private Student Loan and MPower Student Loan provide you with loans on the basis of your academic excellence and not on the basis of your credit score.
Q4. How can I qualify for a student loan with bad or no credit?
To qualify for a student loan with a bad credit score or no credit, you just simply need to apply for the loan according to your credit score and academic performance. You can also look for loans that allow pre-qualification.
Q5. How to get a student loan with bad credit and no cosigner?
If you have a bad credit score and you have no cosigner then you can go for student loan services like Funding U or A.M. Money Private Student Loan. They provide student loans to people with bad credit and no cosigner.
Q6. Why is student loan forgiveness a bad idea?
Student loan forgiveness is a bad idea because it would be unfair to the people who have already paid their debt. If the government wants to forgive student loans, it should do it for everyone and not for a selected list of people.
At Last
If you are a student, looking for student loans for bad credit, then, first of all, you should try for a federal loan. If you fail to get a loan from the federal government, then only you should start looking for private student loans with bad credit. In case, you have a bad credit score then you also go for a co-signer loan, where someone else with a better credit score can take responsibility for your loan on your behalf. Also, before making the final call, make sure that you check the ratings and reviews of the private student loan lender you are going for.
Author Profile
- Meet our Author of Our Editorial Team, Susan Anderson. She is an experienced writer and financial expert who has been writing about credit cards, card offers, services, and other related topics for more than twenty years. With her in-depth knowledge on the matter and her ability to distill complex topics into useful information for readers, Susan has become a go-to source for reliable credit card advice. In addition to her work at the editorial team, she also contributes to major publications such as The Wall Street Journal and CreditCards.com. With her expertise and industry experience, she is able to provide sound advice on all aspects of credit responsibly while helping people save money in the process.
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