What Credit Score Do You Need To Get A Private Student Loan?

While most federal student loans do not have credit requirements, private student loans do. So, if you are looking for a private student loan, it is important to know what a good credit score is for a student loan.

Note that if you don’t have a good credit score yourself, you can apply with a co-signer who does. Let’s take a look at what lenders look for in an application, including the credit score needed for a student loan from a private lender.

What Is A Good Credit Score For Student Loans With A Private Lender?

When deciding if your credit (or that of your co-signer) is sufficient, you need to know how lenders will view different credit scores:

  • Middle 600 or less: Most private lenders will not approve you for a student loan without a co-signer. You will have to rely on student loan options for bad credit, such as federal student loans or applying with a co-signer.
  • Mid-600s to 690s: You are likely to find few lenders willing to work with you, and your chances of qualifying on your own will be uncertain. If you are approved, expect to pay expensive private student loan rates.
  • 690 to 720: It will be faster and easier to find lenders who are ready to work with you. The rates on your private student loans will generally be closer to the average range of rates offered by a lender.
  • 720 and more: You could have your choice among best private student loans there, and your credit score will work in your favor. You can also get the lowest student loan rates.

How to know if you qualify for a private student loan

Your credit score is a central factor in determining whether a lender will approve or deny your private student loan application. But those three numbers aren’t the only factor that matters to lenders.

Here’s what you need to do if you have a good credit rating for student loans and meet other requirements:

Check your credit score

First of all, you need to know exactly what your credit score is. Students may not be sure what their credit score is or whether it is enough to get a private student loan on their own.

Fortunately, there are a few options for check your credit score for free, such as that LendingTree’s free credit tool.

Make sure you meet legal borrowing requirements

Lenders must comply with many US federal and state laws on how they can do business. From a legal point of view, most lenders set the following criteria for private student loans:

  • Be a U.S. citizen or legal resident
  • Be 18 years of age or older
  • Use student loans only for education expenses
  • Show that you are enrolled at least part-time in an educational program which qualifies

Some lenders will only provide private student loans to residents of certain states in the United States or to those enrolled in specific colleges. Before you apply, check the lender’s requirements to make sure you meet them.

Look at your income and your debt history

In addition to assessing your credit score for student loans, lenders also set financial and employment criteria. Private student lenders look at the following factors to try to determine if you can afford to pay off this debt:

  • Credit history: In addition to your credit score itself, lenders will look at your credit report for derogatory marks, such as late payments, overdue accounts, and bankruptcies. They will also want to see a mix of credit accounts with a history of on-time payments.
  • Employment and income: Not all students have a job, but if you are a student who does, it can improve your chances of getting approved. Most lenders will ask for proof of employment and income, such as a recent pay stub.
  • Debt-to-income ratio (DTI): Lenders will also compare your income to your monthly debt costs to make sure you can afford additional payments, factoring in debts like your credit cards or even your housing costs (rent or mortgage). A Lower DTI may suggest to lenders that you are in control of your finances; a higher value can cause difficulty in obtaining a loan. They usually want to see a DTI of 2 less than 8% or less Use our DTI calculator to estimate yours.

Request private student loan rate quotes

Each lender has their own credit score requirements for private student loans, which are not always advertised. One of the best ways to find out if you will qualify for a private student loan from a particular lender is to request a loan rate check.

Lenders can usually perform a gentle credit check to generate a rate estimate. However, some might not be, so you should check if this is a soft or hard credit investigation before allowing the lender to perform it. If this is an indirect request, it will not affect your credit score.

Once the lender determines if you qualify, they’ll list all the rates they can offer you. Or, if you don’t qualify for a private student loan, you may find out without a serious credit check which could lower your score.

Should you apply for a private student loan with a co-signer?

The reality is that most students cannot meet the required credit score, income, or other borrowing criteria set by lenders. But if you don’t have a good credit score for private student loans, that doesn’t mean they aren’t an option.

One solution is to apply for private student loans with a co-signer. In doing so, you can:

  • Get good credit from a parent or other co-signer
  • Qualify more easily for the loan
  • Get better interest rates

Not only are co-signers common, but some lenders, like Ascension and CommonBond, will not accept private student loan applications without them. Other lenders allow borrowers to apply with a co-signer if they do not meet the credit and income criteria on their own.

Don’t forget to check if your lender offers a release of the co-signer and under what conditions. Citizen’s Bank, for example, allows a primary borrower to release a co-signer after making 36 monthly payments on time.

Do lenders view graduate students differently?

If you are pursuing higher education, you may find it easier to obtain private student loans for higher education. That’s because, according to the Consumer Financial Protection Bureau, “as a graduate student or professional, you might be more confident about your job prospects and earning potential.”

Graduating students are also more likely to have a high-wage work history, especially if they have spent a few years working after graduating from an undergraduate degree. They also tend to have longer credit histories, which allows lenders to gain insight into the applicant’s financial management.

Additionally, many lenders offer private student loans specifically to graduate students who have different requirements. CommonBond, for example, requires co-signers for its general undergraduate and graduate student loans. However, he has no such requirement for his MBA student loans.

Many lenders offer student loans specifically to students in MBA, medicine, dentistry, law, or other graduate programs that can lead to well-paying careers.

Conclusion: Good credit is necessary for private student loans

It is a good idea to use federal student loans first, as they have no credit requirement. But private student loans can be an important tool in filling the gap in college costs. You or a co-signer must have a good credit rating to get student loans from a private lender.

If you need student loans now, getting a co-signer is the way to go. But it’s never too early to start building credit and improve your chances of qualifying for student loans in the future.

Rebecca Safier contributed to this article.

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