What Is the Minimum Credit Score Needed for Student Loans?

As with all loan types, your credit score significantly impacts your eligibility for private student loans. Your credit score may also affect critical aspects of the loan, such as the total loan amount, interest rate, lender options, and repayment terms. But what is the necessary credit score for student loans? Read more to find out. 

Federal Student Loans vs Private Student Loans Credit Scores 

In most cases, your credit score can impact your approval for a loan, your interest rates and loan terms, and whether you need a cosigner. The credit score requirements of federal student loans and private student loans differ significantly, as do their benefits. 

Credit Requirements and Benefits of Federal Student Loans 

Federal loans, including Direct Subsidized Loans and Direct Unsubsidized Loans, do not have strict credit score requirements. Instead, federal loan eligibility is based primarily on financial need and enrollment status. Additionally, federal student loans do not require a cosigner. 

There are many benefits of federal student loans. Direct Subsidized Loans offer interest subsidies (meaning the government pays the interest on the loan) while the borrower is in school or during grace or deferment periods. Federal loans offer income-driven repayment plans that adjust monthly payments based on the borrower’s income.  

Public Service Loan Forgiveness is available for borrowers who have made the equivalent of 120 qualifying payments and work in public service jobs, such as working for government agencies or nonprofits. Federal loan borrowers facing financial challenges may also qualify for deferment or forbearance programs to reduce or postpone payments. 

Federal Loans have fixed interest rates that remain for the life of the loan, and these rates may be lower than those from private lenders. Federal student loans also have predictable, standard repayment plans, but many borrowers have the option of graduated or extended repayment plans. 

Credit Requirements and Benefits of Private Student Loans

The credit score requirements of private student loans vary tremendously between providers, but most loan products require a certain credit score. Your credit score and history can impact the terms of your private loans, which is why private student loans often require cosigners. This is especially true for borrowers with low credit scores or minimal credit history.  

Private student loans may offer many benefits and include customizable features. They can have fixed interest rates, variable interest rates, or rates that change over time based on market conditions. Private lenders often provide greater flexibility in choosing repayment terms, allowing borrowers to customize repayment plans based on their situation. ​​For example, Ascent has up to 40 repayment options–more than any other student loan–ranging from 5 to 20-year terms, depending on your program and the loan options.  

Additional benefits like zero fees, cash back at graduation, and automatic payment discounts are other common perks to look out for when evaluating lenders. Some private lenders (including Ascent) also offer cosigner release options, which will relieve cosigners from responsibility for the loan if the primary borrower meets certain criteria.  

Remember that loan terms, rates, and benefits will vary significantly between lenders and borrower qualifications, so it is important to do your research and find the best fit for your needs. Often, students may apply for a combination of federal and private student loans in order to cover the full cost of tuition expenses.  

Understanding Credit Score for Private Student Loans 

While every lender requires different credit score requirements for specific loans and terms, understanding the general credit ranges can help predict the type of loan and loan terms you will get based on your credit score.  

For example, FICO® scores are based on the credit score ranges below: 

• Poor Credit: 300 to 579 

• Fair Credit: 580 to 669 

• Good Credit: 670 to 739 

• Very Good Credit: 740 to 799  

• Excellent Credit: 800 to 850  

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As with any type of credit-based loan, a higher credit score is generally a sign that the borrower may be more credit worthy, and therefore more likely to pay the loan back on time. ​This could have an impact on your eligibility or the loan terms you are offered. ​But​, fear not,–there ​are options for aspiring borrowers with low credit scores or no credit history at all. If you are unable to qualify for a loan on your own, you can consider applying for a student loan with a cosigner. 

While many lenders do have a minimum credit score, these requirements will often vary based on the loan product, credit history, and whether you are applying with or without a cosigner. In many cases, the only way to find out how your credit score will impact your eligibility or interest rate is to apply.  

How to Find Out Your Credit Score for Student Loan Applications

There are several ways to determine your credit score. The easiest option for many individuals is to obtain their credit score from major credit reporting agencies, including Equifax, Experian, or TransUnion. You are also entitled to one free credit report each year from AnnualCreditReport.com. Checking your credit report annually is a great way to keep track of your credit score and does not count as a hard inquiry against your credit profile.  

Some credit monitoring agencies also provide ongoing access to your credit score, and many banks and financial institutions also offer free access to credit scores through their online platforms. Some credit card statements also include your credit score. 

​​​Many lenders will also allow you to check your rate without affecting your credit score in just minutes. This can be helpful if you are looking to get an idea of your ​prequalified​ rates or compare rates across different private lenders.  

Tips to Improve Your Credit Score for Student Loans 

Luckily, there are many ways to improve your credit score for student loans. Some of the most important strategies you can use include: 

• Make timely payments on all your bills, credit cards, and loans. 

• Reduce your credit card balances to keep your credit utilization rate (the ratio of your credit card balances to your credit limits) below 30% 

• Check credit reports and dispute any errors. 

• Only open new credit accounts after you have completed the student loan application process. 

• Diversify your credit mix using various types of credit, including credit cards, installment loans, and retail accounts. 

• Establish a good credit history if you have limited credit history. For example, opening a low interest credit card is a strategy that many college students use to start building credit early on.  

Getting Student Loans Without a Cosigner

A cosigner agrees to share the obligation to repay the loan if the primary borrower is unable or unwilling to do so. Getting student loans without a cosigner can be challenging, especially if you have limited credit history or low credit scores. However, there are some strategies that you can use that will make it more likely. 

• Build a positive credit history. 

• Investigate multiple loan providers, both private and federal. 

• Apply to lenders that consider other factors besides credit scores. 

• Demonstrate stable income or employment. 

• Apply for scholarships and grants. 

Even if you can qualify for a student loan without a cosigner, applying with a cosigner may help you qualify for a larger loan, lower interest rates, or better loan terms. 

Although cosigned loans are most common for students with poor credit or little credit history, there are options available for prospective students who do not have or want a cosigner. For example, Ascent offers credit-based and outcomes-based loans without a cosigner for eligible students. In addition to credit-friendly programs, some lenders may offer secured loans, where the borrower provides collateral, such as a savings account or real estate, to secure the loan. Secured loans can be a great option for students with low or no credit and are figuring out how to pay for college.  

If you do plan to apply with a cosigner, visit our blog for more tips on how to find a cosigner for your student loan. 

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 college loans and undergraduate student loans, we are here to help students and their families make informed decisions about their future in college, and beyond. 

Credit Score for Private Student Loan FAQ

Is it Hard to Get Approved for a Student Loan? 

The difficulty to get approved for a student loan depends on many factors. Borrowers with a high credit score and good credit history may find it easy to get approved for a low-interest rate loan with favorable terms. On the other hand, borrowers with poor credit scores or little credit history may struggle to get approved for a student loan, particularly if they do not qualify for federal student aid. Luckily, Ascent makes the application process as simple and easy as possible. 

What Disqualifies You from Getting a Student Loan?

Different lenders will disqualify you from getting a student loan for different reasons. The good news is even if one disqualifies you, another may not. Some common reasons for disqualification may include: 

• Defaulting on existing or previous student loans 

• Exceeding borrowing limits 

• Failure to meet satisfactory academic progress (SAP) requirements 

• Conviction of drug offenses 

• Filing for bankruptcy 

• Failure to register for the Selective Service (the draft) 

• Not being enrolled in an eligible program 

• Outstanding refund owed on a federal grant 

Does Bad Credit Affect Getting Student Loans?

Bad credit can have a tremendous impact your student loan application. Many lenders will not lend to you at all, and those that will lend to you, will often only do so if you agree to relatively unfavorable terms or to have a cosigner. Bad credit may decrease the total loan amount you are approved to borrow, and increase your interest rate.