Why Your FICO ® Score Matters to Lenders

Feb 26, 2026 | By: Ascent
Categories: Blog, For College Students, For High School Students, For Students

If you’re applying for student loans, credit cards, or other financial tools for the first time, you’ve probably heard the term FICO® Score. But what does it actually mean, and why does it matter so much when you’re paying for school?

Your FICO® Score is a key factor when getting student loans. It can affect whether your application is approved, the interest rate you pay, and how much your loan will cost over time.

This guide breaks down how your FICO® Score is calculated and shows practical ways to strengthen it before applying for a student loan.

What Is a FICO® Score and How Does it Work?

A FICO® Score is a three-digit number that gives lenders a quick picture of how you handle credit. Lenders use it to help decide if you qualify for a loan and what interest rate you’ll pay.

Your score comes from your credit history, which includes things like how you’ve managed loans, credit cards, and other lines of credit. The main factors that influence your score are:

Payment History – Paying on time matters most. Even one missed payment can affect your score.

Amounts Owed – How much credit you’re using compared to your limits and how much you still owe on loans. Keeping balances low helps your score.

Length of Credit History – The longer you’ve responsibly managed credit, the better it looks.

New Credit – Opening too many accounts at once can lower your score.

Credit Mix – Having different types of credit, like a credit card and an installment loan, can help show you can manage money responsibly.

FICO® Scores range from 300 to 850. Higher scores generally make it easier to get approved and get better loan rates, while lower scores can make lenders more cautious.

If you’re new to credit, a lower score doesn’t necessarily mean something went wrong. It’s normal for students who haven’t had much credit history yet. This is why many students apply with a cosigner, usually someone with a stronger credit history, to help qualify for better loan options.

Why Lenders Care About Your FICO® Score

Lenders use your FICO® Score because it helps them understand how likely a borrower is to repay what they borrow. Since lenders review thousands of applications and cannot get to know each person individually, the score gives them a consistent way to compare applicants.

Your FICO® Score helps lenders:

Gauge how much risk is involved in lending to you

Decide whether you qualify for credit

Set interest rates and loan terms

In general, a higher FICO® Score signals lower risk, which can lead to better options. A lower score may limit approval or result in higher costs. For many students, this has less to do with financial mistakes and more to do with having limited or newer credit history.

Understanding why lenders care about your FICO® Score Score helps you see the application process from their point of view and understand how your credit history affects the options available to you.

How FICO® Score Influences Private Student Loan Rates

Your credit score can influence several parts of your student loan experience, including:

Approval: Some private student loans use credit history as part of the application review. A stronger score may increase your chances of approval.

Interest Rates: Higher scores often help you qualify for lower interest rates, which can reduce how much you pay over the life of your loan.

Loan Terms: Your score may also affect repayment options, borrowing limits, and whether a cosigner is needed.

If your credit history is limited, adding a cosigner can sometimes help strengthen your application and open the door to more options.

How Do You Check Your FICO Score and Credit Report?

Most credit card companies and banks now provide free access to your score through your online account dashboard, where you can see your current score, what’s affecting it, and tips for improving it.

You can also access your free FICO^® Score and credit report online via any of the three main credit reporting agencies: Experian, Equifax, or TransUnion.

What If Your Score Isn’t Where You Want It Yet?

If your FICO® Score isn’t where you hoped it would be, you’re not behind and you’re not stuck! Credit scores change over time, and consistent habits matter more than quick fixes.

Focus on:

Making payments on time

Reducing balances when possible

Avoiding unnecessary debt

Limiting the amount of new credit cards you open

Keeping accounts in good standing

With time and steady effort, your score can improve (and so can your financial options!)

Learn More with Ascent

Navigating the student loan application process can be challenging, and Ascent is committed to providing students and families with the financial resources needed to pursue their dreams.

From financial wellness resources to our flexible private student loans and undergraduate student loans, we are here to help students and their families make informed decisions about their future in college, and beyond.

FICO® Score for Private Student Loan FAQ

Does my FICO® Score affect getting a student loan?

Yes. Your FICO® Score is one of the key things lenders look at when reviewing your application. Higher scores generally make it easier to get approved and qualify for lower interest rates. If your score is lower or you have limited credit history, you may need a cosigner or may be offered different loan terms.

What can prevent me from getting approved for a student loan?

Approval depends on several factors, including your credit history, borrowing limits, and enrollment status. Some common reasons applications may be declined include:

Defaulting on existing or previous student loans

Borrowing more than your school’s certified cost of attendance

Not meeting satisfactory academic progress requirements

Filing for bankruptcy

Being enrolled in an ineligible program
Even if one lender declines you, another may approve you—especially with a cosigner or a stronger credit profile.

Can I still get a student loan with a lower FICO® Score?

Yes. Having a lower score or limited credit history doesn’t automatically disqualify you. Some lenders may require a cosigner, offer smaller loan amounts, or provide different interest rates. Improving your credit over time, such as making on-time payments and reducing balances, can increase your chances of approval and help you qualify for better terms.