Credit score requirements for student loans – do you need good credit?

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Students with insufficient cash to pay for college don’t have to deprive themselves of their dream careers. They can apply for student loans to pay for their education. 

Just like all other types of loans, lenders consider different factors like credit scores when deciding whether to approve an application or not. So, what credit score is needed for a student loan? 

What Is the Required Credit Score for Student Loan?

The answer to this question depends on the type of student loan you want to get.

Federal Student Loans

There’s no need for a credit score if you’re applying for a federal student loan. Most students entering college don’t have credit histories. If they do, they usually have bad credit. 

Although federal student loans have no credit requirements, you need to go through a credit check if you are applying for a federal PLUS loan.

Private Student Loans

On the other hand, you’ll need a credit score of at least 670 (FICO) if you want to qualify for a private student loan. If you have a thin credit file or have no credit history at all, you need a cosigner with a stable income and a good credit score to qualify.

Student Loan Refinancing

You need a score of at least 650 if you’re looking to refinance your student loans. If you’re out of college and have multiple loans to pay off, you can consolidate them, get lower interest rates, and shorten or extend the loan term through student loan refinancing.

Please refer to the table below for FICO scores and VantageScores.

Fico Score Vantage Score
Exceptional800-850 Exceptional 781-850
Very Good740-799 Good 661-780
Poor580-669 Poor 500-600
Very Poor300-579 Very Poor 300-499

What are the Other Requirements When Applying for a Student Loan?

Federal Student Loans

The federal government developed the federal student loans and the US Department of Education acts as the lender while Congress sets its annual interest rate. 

There are different types of these loans: direct subsidized loans, direct unsubsidized loans, direct plus loans, and direct consolidation loans. Here are the requirements that you need to meet to be eligible.

  • You need to be a U.S. citizen
  • You must be enrolled at an approved educational institution
  • You need to fill out a Free Application for Federal Student Aid (FAFSA). You’ll answer questions about your family situation, such as the income and assets of your parents, and how many you are in the family. 

Here are the types of federal student loans and how to qualify:

1. Direct Subsidized Loans

Students with “exceptional financial needs” based on federal standards are perfect candidates for direct subsidized loans. It will be determined through the information you supply when you complete the Free Application for Federal Student Aid (FAFSA) form. FAFSA will ask questions about your family situation, such as the income and assets of your parents, and how many you are in the family. 

Undergraduates who are enrolled at least part-time won’t be charged with interest. Furthermore, subsidized loans won’t incur any interest until you graduate. You’ll get a 6-month grace period after leaving school before you start repaying your federal student loan. You won’t be charged interest if you have a deferred student loan (loan payments are postponed for a certain period).

2. Direct Unsubsidized Loans

Your financial needs aren’t factored in when taking a direct unsubsidized loan. Your school will consider several factors such as the cost of attendance and other financial assistance you receive when determining how much you can borrow. You’ll be charged interest even if you’re still in school and during deferment or grace periods.

3. Direct Plus Loans

Parents who need financial assistance for their college students can take out parent PLUS loans. Grad PLUS loans are also available to graduate or professional students. 

PLUS loans don’t require a credit check or cosigner and offer low and fixed interest rates. They’re not based on financial need and the parents who applied for the loan will be held responsible for the repayment. PLUS loans are available to undergraduate, graduate, and professional students.

4. Direct Consolidation Loans

If you have more than one federal student loan, you can combine them into one through a direct consolidation loan. It has a fixed interest rate that’s based on the average interest rate of all the student loan debts you’re consolidating. 

A direct consolidation loan will help simplify your repayment plan since you’ll pay off a single loan instead of multiple ones. If your previous loans had variable interest rates, a direct consolidation loan will use their average as a fixed interest rate, and you can choose to lower your monthly payments by opting for a longer loan term.

Private Student Loans

While federal loans come directly from the government, private student loans are issued by banks, credit unions, and online lenders. Many students take out private loans to cover other school expenses once their federal loans run out. The loan amount and loan terms vary by lender. Private student loan lenders have different interest rates but are generally higher than the interest rates of federal student loans.

When applying for a private student loan:

  • You need to have a good credit score.
  • If you have a low credit score, you need to have a cosigner who has a good credit standing and a stable source of income.

Student Loan Refinancing

If you already have student loans but struggle to pay them off, you should consider taking out a student loan refinancing. Private lenders, such as PenFed Credit Union, will pay off all your existing loans using the new loan with new terms that you take out from them. 

Student loan refinancing is a good option if the new loan comes with lower interest and monthly payments compared to your existing student loans.

Credit score requirements vary between lenders. You must have a credit score of at least 650 to be eligible. You’ll have better chances of getting approved if you have a higher credit score. 

Lenders will also consider your debt-to-income (DTI) ratio. You must have a DTI of 50% or less if you want lenders to consider you as an appealing borrower. If not, you’ll need a co-signer who meets the requirements. 

Keep in mind that if you refinance federal student loans, you’ll lose significant benefits like a chance for loan forgiveness or salary-based payment.

How Can You Build Your Credit Score To Qualify For Student Loans?

When you build up your credit score, you’ll have better chances of getting a loan. You’ll also have access to lower interest rates and more options.

  • Get on the electoral register – Lenders will find it easier to verify your identity if you’re on the electoral register.
  • Use your credit card responsibly – A credit card comes in handy as it allows you to make purchases and pay for them at a later time. Be sure to use it responsibly and make payments in full and on time. Late or missed payments can negatively affect your credit score. 

Lenders consider your payment history when deciding whether to approve your loan application or not. If you want higher chances of getting approved for a loan with a low-interest rate, always pay on time.

  • Don’t max out your credit limit – Use your credit card only when necessary and avoid maxing it out. You need to maintain a debt utilization ratio below 30% to improve your credit score.
  • Pay your bills on time – Payment history plays a huge role in calculating your credit score. You should pay all your bills on time so that you can increase your credit score.

How to Secure The Best Student Loan?

Before you apply for a student loan, ask for help from your family first. You can also check if you’re eligible for a scholarship or a financial grant. Think about finding a part-time job while studying. If all these options are not possible, then you can look into student loans. 

There are various student loan options in the market today and you need to know how to find the best one.

  • Determine how much you need – You should have a good idea of how much you need to borrow and make sure you only apply for that amount.
  • Complete the FAFSA form – Don’t forget to complete the FAFSA form. The deadline for submission depends on where you live, so be sure to visit to know the deadline in your state.
  • Know your options – You can choose from federal student loans and private student loans. The former is a good option if you’re worried about your credit score. However, if you have a good credit standing and you already have a federal student loan but still need more financial assistance, a private student loan may very well be what you need.
  • Always compare – Compare all the options you have. Take a closer look at the interest rates, loan terms, and monthly payments. Use an online student loan calculator to determine how much you’ll pay every month based on the loan amount and interest.
  • Don’t forget your payment deadline – You’ll pay your student loans every month and you need to know the deadline. Remember, you need to make timely payments if you want to build or improve your credit score. You don’t want to ding it just because you forgot the due date.

Where Can You Check Your Credit Score?

Before you apply for a loan, you should check your credit score first. It’ll give you an idea of what type of loans you’re eligible for. You’re entitled to get a free copy of your credit report every year from the three credit reporting bureaus: Equifax, Experian, and TransUnion. You can also go to

Will You Be Eligible For a Student Loan If You Have Bad Credit?

Most federal loans except for PLUS loans don’t require a credit check so even if you don’t have a good credit history, you may still qualify for a student loan. However, you still have to satisfy other requirements but your credit score or a lack of it won’t be a problem. Federal loans have fixed interest rates regardless if you have a bad or excellent credit score.

But if you’re eyeing private student loans, your credit score will be checked by lenders. You may be required to have a cosigner with good credit standing to improve your odds of getting approved. 

If that happens, your interest rate will be higher than those with good credit standing. In many cases, private student loans are used as a supplement when student loans aren’t enough to cover educational expenses.

How Can Student Loans Affect Your Credit Score?

Just like any other loan, student loans will appear on your credit report. All payments you make, whether timely or late, will be recorded, and that’s why you need to be responsible for making all due payments on time. 

Regular and timely repayments will help you build or improve your credit standing. It will help you make a better impression on lenders thereby increasing your chances of getting approved for other types of loans in the future, such as mortgage and auto loans. 

Poor credit history will lead to fewer loan options and a higher interest because you’ll be considered as a high-risk borrower.

In case you’re having problems paying back the loan, talk to your creditor right away. If you’re on a federal student loan, ask if you qualify for a salary-based repayment plan or deferment until you get your finances back on track. If you have a private student loan, negotiate a repayment plan that you can afford.


A student loan is an excellent option if you need financial help for your college education. You can choose from federal student loans or private student loans. Federal loans for students are common because it doesn’t matter if you have a bad or excellent credit score. 

On the contrary, private student loans will require you to have a good credit score to be eligible. Deciding which one is the best option for you will depend on your current financial standing and unique personal needs.

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