The cost of education has been rising significantly since the past years. So are the costs associated with it, like accommodation, books, study material, etc. A vast majority of families sending their children to college often require financial help. Though all the scholarships and grants options are exhausted, costs mostly never meet and student loans become the only way to pay for college. However, many fail to qualify due to their bad credit score. One option that can be explored is the no credit check loans.
Table of Contents
- Can you get a student loan without a credit check?
- Federal Student Loans
- Private Student Loans
- Other options
- Manage student loan debt
Can you get a student loan without a credit check?
People with bad credit or no credit scores can also get student loans for their college expenses. It is possible to get a student loan with no credit check or bad credit and the most obvious choice is the Federal Student Loans. You can also get a student loan without a credit check from private lenders, but there is always a catch. You will most probably need a cosigner, although sometimes a cosigner may not be required. Below are the two ways you can proceed in case you don’t have a good credit score.
Looking for student loans? Find the best student loans just for you.
Do Federal Student Loans require a credit score check?
Federal Student Loans do not require a credit score check. However, it is mandatory that you meet the eligibility criteria in order to get a Federal Student Loan. Getting a Federal Student Aid for paying your college tuition must be your number of priority, be with a good credit score or a bad credit score as they do not require a credit history and come with a number of benefits such as Income-Driven Repayment Plans or the loans forgiveness. Best Federal Loans are the Direct Subsidized loans, where the government pays the interest while you are enrolled in your college. Though Unsubsidized Direct Loans have a lower interest rate comparatively, the interest accumulates during your years of study in college.
You must first the process of applying to a student loan by filling out FAFSA(Free Application for Federal Student Aid). The form uses information about your family’s financial situation to determine your Expected Family Contribution (EFC). You can choose to read more about Federal Student Loans so that you can proceed in an informed manner.
But, in most cases, Federal Student Loans alone do not fill the complete required amount and sometimes they do not amount to even a quarter of the total cost for college. In such conditions, it is important to look out for other options. They include Private Student Loans, personal loans, etc.
Getting Private Student Loans while having a bad or no credit score
Private Student Loan Lenders always ask for a credit score. A minimum credit score of 690 is required to qualify as a good credit score. If you have a bad credit score (Credit score that ranges between 300 and 629) or if you have no credit score(usually for Students just starting college), there are the following ways to get a Student loan from a private lender.
Private Student Loans with a Cosigner
To get a private student loan, a cosigner with a good credit score is usually required to sign up along with the applicant to qualify for a Student loan. It means that the cosigner shall be equally responsible for the repayment of your student loans. In case you miss out on a payment, then it shall affect their credit scores, thereby being held responsible for your mistakes. That is the reason why a cosigner is required. Though you can opt to release your cosigner once you project a good credit score. Student loans from a private lender with a cosigner can help you get a good rate of interest on your student loans while borrowing. Doing proper research is important as it can help you get a better Student Loan from a Private Lender.
Private Student Loans without a Cosigner
Though it is tough to find a lender who can give you a student loan without a Credit score or a good credit score, it is not impossible. Private Student Loan lenders tend to increase the rate of interest for your loan amount if you have a bad credit score.
They usually check with your future income potential, based on your course, your year of study and the school you are studying in. A higher future income potential shall increase your chance of getting a Student loan with a lesser rate of interest and a better repayment plan and a higher principal amount. But this is a rare case as many other factors can come into play and affect your chances of getting a student loan.
Other Options for getting student loans with no or low credit
There are some other options to get a Student loan with a bad credit score or no credit score. They are as follows:
Your parents can take a loan on your behalf by giving their credit scores. In case your parents have already taken a student loan for you, another person can take a student loan on your behalf, provided they have a good credit score. Parent loans do not necessarily mean that only the students' parents can take a loan. Even a person you know and who are willing to help you out in your education can take a parent loan to help you with your college tuition.
Not all. but some states offer valuable resources for students attending college in states that do sponsor student lending. For example, the Dakota Education Alternative Loan(DEAL) allows you to borrow up to $50,000 if you are studying in North or South Dakota, Minnesota, Wyoming, or Wisconsin, and all your Federal aid options are exhausted. Some others include SELF loans by The Minnesota Office of Higher Education (up to $10,000 annually), etc.
This is the least recommended option, but still, it is possible to pay for your college expenses by taking out a personal loan with no credit check. It is highly advised that you borrow a personal loan to make expenses meet such as for study material or hostel fees but NOT your tuition fees. There are different types of personal loans such as Secured Loans and Unsecured Loans.
It is a very common issue of not having a good credit score. And it can be important for you to borrow a loan to complete your education. So you must try to cover your fees in Federal Student Aid, to the most. You must seek a private loan only after you have exhausted all your Federal Student Aid options. And personal loans should only be your last resort. But before you agree to get one of these loans it is important to read the fine print to understand all of the student loans and its terms and get a good idea of how much amount you will actually be paying in the end.
Once you have completed your school and built a solid credit profile, you can choose for a solid Student Loan Repayment Options or you can also opt for Student loan refinancing to a lower interest rate. Check out the Best Companies to Refinance Your Student Loans.
Scholarships loans for the special field of studies
Pursuing graduation in a specific high demand field as in science like nursing etc can help you to obtain scholarships considering the type of your profession. Many organizations provide scholarships in the field of business, history, mathematics, science, etc.
For nursing and teaching professions, the federal government provides low-interest loans by asking for credit checks. Students pursuing nursing who are in financial needs, health resources, and services administration issue them with loans for low interests. This program is helpful for associate’s, bachelor, and graduates.
If you are currently working as a nurse, the federal government has bought many policies in your favor. If you continue to work for 2 consecutive years in a critical shortage area, the nursing education loan repayment program will pay 60% of the student loan balance. And if you continue to work for the 3rd year, the government will further pay 25% of your loan debt.
Similarly, for teachers, such benefits are provided by the Teacher Cancellation for Perkins Loans Program and Teacher loan forgiveness program. These programs help you apply for forgiving education loan debt.
Grants and Scholarships that require No Credit Check
Federal pell grants usually applicable to undergraduate students assist students in financial needy situations. And if you qualify you to need not repay. There are other private institutions providing grants and scholarships. And they do not require any credit checks. While filling the FAFSA, also check the scholarships provided by the state government. You can apply for state-based grants and state-specific scholarships.
Once you finish your schooling and build a solid credit profile, you can choose for a solid Student Loan Repayment Options or you can also choose for student loan refinancing to a lower interest rate. Consider checking the best Companies to Refinance your Student Loans.
Research loans with local/regional banks and credit unions
Major banks and organizations have strict guidelines for lending money as they have criteria for borrowers like credit check and income level and after evaluating they grant loans. Likewise, the Local and regional credit unions have the underwriting guidelines that they use when issuing loans.
For the person who has a limited credit history, the credit unions can benefit the student, and sometimes the small lenders are also a great help.
Some of the benefits of credit unions
1- As being a not-for-profit credit union offer lower interest rates as compare to private loan lenders
2- Credit unions actually work for their members and try best in providing the best of services to their members. And to get the benefits of union you have to be a member of the union and it is pretty easy as they have general requirements with a minimal amount of registration so it is better to join a local credit union.
Find lenders that do an alternative credit check
Another option for the borrowers who are looking for a loan without a credit check is to find a lender that offers alternative credit checks. Today there are a number of private lenders on the online portal who are creating new and innovative ways to determine creditworthiness as it helps in getting chosen by the borrower more often.
It doesn’t mean that the lenders won’t evaluate the credit history, they will, but if the student doesn’t have that good credit score they also look on the student's academic performance, future job prospects, etc when deciding on lending loans and they consider giving a broader range to evaluate the student’s profile and lending money accordingly.
Using an income-share agreement
Using the income-share agreement is better than applying for a student loan without a credit check, as this agreement mainly focuses on arrangements in which students promise a percentage of their future earnings to investors willing to pay for their schooling. This arrangement is looked upon by many colleges as a secondary option for financial help to the students.
It focuses on the percentage of student income that goes to a benefactor for a specific number of years and it depends on the terms of the income-share agreement. The main focus is, that the income-share agreement will help you for paying less than the money you borrowed.
How to manage your student loan debt
When you apply for student loans, always pay on schedule. Your credit history will be benefited when you successfully manage to pay your debt. It gives you an opportunity to keep a good record history of your payments increasing your credit score.
Contact your lender before it becomes difficult to repay the student loans. Managing repays on different timelines can be a tedious task to follow. Therefore consolidating these loans can be helpful. There are 2 types of consolidation. The federal loan consolidation and private loan consolidation.
Federal loan consolidation
This loan is available with a credit check and useful when one possesses multiple federal loans. It helps you make a single payment for a month. In some cases, while extending the repayment schedule one can expect a cut in monthly payment by half.
Private loan consolidation
Private loans can also be consolidated. If you fail to make your repayments continuously you will be in default. To avoid this, lenders offer consolidation offers with credit checks. By following the original repayment terms and consolidation student loans you can manage student loan debt.