According to a survey conducted by U.S. News in September 2022, more than 67% of undergraduate students had a credit card in their own name, and around 9% had access to the credit card as an authorized user. But almost half of the students have debts on their credit cards.
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Sure, the unpaid debts will affect their credit score. That’s why some lenders usually will not approve student loan applications with bad credit. If the students have a low credit score or even no credit at all, they may end up getting a loan with high interest rates.
But no worries! Today, there are a few student loans that are specifically designed for those who have bad credit and need guaranteed approval. If you’re looking for a student loan but have a low credit score, you can try to choose one of several student loans that we recommend.
Let’s get started!
How Does a Student Loan Work for Bad Credit?
If your credit score falls below 580, you are considered to have bad credit. Generally, student loans will be approved if you have a high credit score, excellent financial standing, and a good co-signer.
However, student loans with bad credit will also be granted without considering credit score and credit history. Instead, a bad-credit student loan will consider other factors, such as enrollment, academic achievement, or even projected career outcomes.
Unlike the good-credit student loan, the student loan with bad credit will be distributed by the Education Department or by a private loan servicer after your loan application is approved.
Of course, the funds will be sent directly to your school, and you can see them in your student account, not in your bank account.
What is the Best Student Loan for Bad Credit Guaranteed Approval?
The first choice of student loan for those who have bad credit or no credit is federal student loans. It is only a bad-credit student loan that is approved with a guarantee. This type of student loan does not require a credit history.
Federal student loans are available to every student, whether undergraduate, graduate, or professional. These offer competitive interest rates, so the students can know the loan interest rate in advance before applying for it.
Here are some benefits you can get when receiving a federal student loan:
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- The loans usually offer flexible repayment options.
- Students can make a request for deferment or forbearance.
- These have low fees, which are charged on the loan disbursement amount.
Here are a few disadvantages to federal student loans:
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- The loan sets borrowing limits on both subsidized and unsubsidized loans.
- Borrowers have to pay the interest on direct, unsubsidized loans when they are still in school and during the grace period.
- This student loan is not serviced by the U.S. Department of Education.
- Borrowers can receive a loan servicer once they graduate from school to administer their payments.
If you qualify for loan forgiveness programs, which are based on eligible repayment plans, you may get leeway, and your loans may be deferred. During the deferral period and during the grace period, the U.S. Department of Education will pay the interest on subsidized loans directly while you’re in school, at least half-time.
Of course, there are some requirements you should meet to be eligible for federal student loans, including:
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- Borrowers should be U.S. citizens.
- Borrowers should have a valid Social Security number if they are not U.S. citizens.
- Borrowers should be enrolled in at least a half-time lecture.
- Borrowers should have satisfactory academic progress.
- Applicants have to fill out the FAFSA form.
- If the applicants apply for PLUS loans, they need to go through a credit check.
It’s important to note that students who have bad credit and want to apply for federal student loans may have to go through extra steps to get approved, although federal student loans do not set minimum credit requirements.
Tips to Get a Student Loan with Bad Credit History
Getting a student loan with bad credit is pretty hard, isn’t it? The majority of student loan lenders will require a high credit score, and they often consider applicants who have a good credit history. But in fact, not all students have a qualifying credit score; even many have no credit.
If that’s the situation, be sure to consider choosing student loan providers who don’t conduct credit checks. Before that, some tips and tricks for getting a student loan if you have bad credit or no credit may help you.
Here they are:
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- Consider a federal student loan. As we’ve mentioned above, a federal student loan is the best student loan for those of you who have bad credit. Now, start finding out what requirements you should meet to qualify for the loan.
- Find a co-signer who has a good credit history. If you prefer to apply for the loan with a co-signer, make sure to choose one with a good credit score. Your application may be considered for approval since the co-signer will be responsible for your debt when you cannot pay it off.
- Compare each offer from every student loan provider. To get the lowest interest rate, you should compare, one by one, what each lender offers. Start to figure out whether they provide options when you have trouble paying, whether there are any initial fees, or what they will do if you can’t pay the loan.
- Be sure to choose a fixed interest rate. It will be better for you to choose a fixed interest rate rather than a variable interest rate. Why? A fixed interest rate will not increase or change over time.
- Think about refinancing in the future. Keep in mind that you may be repaying your student loans at a lower interest rate after graduation. If so, consider having student loan providers who offer refinancing in the future. However, you will need a credit score of 670 or higher, solid income, and a history of timely debt payments.
- Notice the net income. Although this is a bonus, it is not wrong if you have a student loan provider that gives you a high net profit. To help you estimate the net profit after borrowing for several years, you can use a student loan calculator.
Top 5 Student Loans for Bad Credit Guaranteed Approval
We’ll show you the five best student loans that you can apply for, even if you have bad credit. From the list, you can compare them one by one based on the interest rates, loan amounts, repayment terms, and leniency regarding whether or not you can negotiate with the lender.
Here are our recommendations for student loans with bad credit that guarantee approval:
1. Ascent Funding
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- Credit score: Not disclosed
- Fixed APR: 3.79%–15.41%
- Loan amount: $2,001-$400,000
- Term Length: 5 to 20 years
- Annual income: Disclosed
- Fees: No
Ascent Funding can be a great option for a student loan if you have bad credit. The loan does not require co-signers or guaranteed approval. To determine the amount of loan approved, they will estimate your future income; for example, if you are in a high-income field of study, your loan amount will be higher.
Depending on the student status, either undergraduate, graduate, medical, or dental school student, the Ascent loan has a long grace period ranging from 9 to 36 months. For both federal and private student loans, the grace period is generally six months.
Ascent loans will give you cash back rewards after you graduate. When you sign up for automatic payments, you may get an interest rate discount of up to 1%.
However, they will cap loans at $200,000 for undergraduates. For yield-based loans, they will set an annual limit of $20,000 with a high interest rate.
To qualify for an Ascent Funding loan, you should:
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- Be at least the age of majority.
- Be U.S. citizens, DACA recipients, or permanent residents.
- Be enrolled half-time for most loans.
- Have a minimum annual income of $24,000.
- Have at least two years of credit history.
- Have a GPA of at least 3.0.
Learn more about the Ascent Funding Loan here.
2. College Ave
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- Loan amounts: $1,000 to the maximum cost of attendance
- Loan types: variable and fixed
- Term Length: 5 to 20 years
- Eligible borrowers: graduate and undergraduate students, and parents
- Borrower protection: forbearance, deferment, and grace period options
- Fees: No
College Ave is another option for student loans with bad credit and guaranteed approval. It allows borrowers to apply for a loan with a co-signer. If you qualify to apply with a co-signer, you’ll need to have at least a minimum credit score in the mid-600s.
The student loan will provide a high loan amount with flexible payments. You can also choose to get a fixed or variable interest rate. If you are a US student, a co-signer will not be required. You may also get a 0.25% interest rate discount if you choose to make automatic payments, but they also accept in-school payments.
If you apply for a loan that is not co-signed, you may get a higher interest rate. Plus, you cannot do a co-signer release until half of the payment term has passed.
Learn more about College Ave here.
3. Funding U
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- Credit score: Not disclosed
- Fixed APR: 8.49%–13.99%
- Loan amount: $2,001-$400,000
- Term Length: 10 years
- Annual income: Disclosed
- Fees: No
Instead of using credit scores to approve student loan applications, Funding U tends to consider approval based on the applicant’s academic achievement, GPA, and career path. Sure, this loan can be a good option for borrowers without a co-signer and a good credit history.
But they lend only to undergraduate students, including first-year students. After graduation, they will give students a $100 gift card.
However, Funding U sets high interest rates with a relatively low annual loan amount. And the loan is only available in 38 states. So, if you live in a state that is not included, you cannot apply for a Funding U loan.
To be eligible to get a Funding U loan, you should:
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- Be a U.S. citizen, DACA resident, or permanent resident.
- Be at least 18 years old.
- Be enrolled full-time in a bachelor’s degree program at a non-profit college for four years.
- Have high academic achievement.
- Have a GPA of at least 3.0.
Learn more about Funding U here.
4. Earnest
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- Loan amounts: $1,000 to the maximum, up to the cost of attendance.
- Loan types: variable and fixed
- Term Length: 5 to 15 years
- Eligible borrowers: graduate and undergraduate students, half-time students, parents, DACA students, and international students
- Borrower protection: 9-month grace period
- Fees: No
Earnest also allows the borrowers to apply for a student loan without a co-signer or credit history. If you have a minimum FICO® score of 665, you may have more flexibility for your loan payments, like missing one payment every 12 months and paying it off later. You may also get a 0.25% interest rate discount if you choose to make automatic payments, but they also accept in-school payments.
Earnest actually offers four repayment plans, including standard repayment, extended-term repayment, interest-only repayment, and a rate reduction. Also, you can take one of the loan protection options: deferment, forbearance, loan forgiveness, or discharge.
However, if you apply for a loan that is not co-signed, you may get a higher interest rate. Plus, you cannot do a co-signer release until half of the payment term has passed.
Learn more about Earnest here.
5. A.M. Money Private Student Loan
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- Credit score: Not disclosed
- Fixed APR: 7.95%–8.8%
- Loan amount: up to $50,000
- Borrower protection: a 6-month grace period and 120 monthly repayments.
A.M. Money is a Chicago student loan that offers private student loans without a co-signer or credit history. Instead, they’ll consider the student’s loan application based on academic achievement.
Students who are approved for this loan will get the same fixed interest rate. They also provide an income-based repayment option for up to 36 months, so the students can pay back their loan upon graduation.
However, A.M. Money private student loans are only available at a limited list of schools. And they also charge an origination fee.
Learn more about A.M. Money Private Student Loans here.
Now, you can compare one-by-one until you can determine which one is better for you to get a student loan, especially if you have bad credit or no credit at all.
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