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College tuition is becoming increasingly difficult for students to afford. The gap between financial aid packages from a federal student loan and the actual costs of attendance continues to grow.

That’s why many college students turn to private loans. But if you have bad credit or no credit, you might have trouble actually getting approved for loans.

There are, however, options out there to choose from. Take a look at five of the best student loans for bad credit to see which ones could help you bridge the gap and stay on top of your tuition and living expenses. 

Overview of the best student loans for bad credit

Brand Best for APR Minimum credit required
Credible Comparing multiple loan options starting at 3.24% APR (with AutoPay)* and 0.94% Var. APR (with AutoPay), See Terms* 670
Stride Income sharing N/A N/A
Ascent Student Loans Applying with a cosigner Variable rates between 1.64% – 11.45% and fixed rates between 4.78% – 14.52% for undergrads 680 (with no cosigner)
Funding U Applying without a cosigner 7.99% APR to 14.49% APR (with autopay discount) None
CommonBond Multiple repayment options 3.74% APR to 10.74% APR 660

Credible

  • Direct lender – No.
  • Origination fees – None.
  • Loan term – 2 – 7 years.

Credible is a strong option for private student loans because rather than being a direct lender, it connects you with multiple lenders in one place. That means you have a better chance of getting matched with a lender that works with your type of credit.

Another plus is that you can review multiple quotes without a hard pull on your credit report. You’re able to compare rates and loan terms side by side. Once you pick an actual loan offer, you’ll move forward with the application with the actual lender, and that’s when a hard credit check is performed.

Credible also works with lenders that allow a cosigner. So if you’re unable to meet the credit or income requirements on your own, you have the ability to get your student loan with a more experienced borrower (like a parent). 

The lenders within Credible’s network offer student loans as low as $1,000 and all the way up to $100,000.

Learn more about Credible or read our full review.

Stride

  • Best Student Loans For Bad Credit - StrideDirect lender – Yes.
  • Origination fees – None.
  • Loan term – 5 – 10 years.

Stride takes the idea of income-based repayment and translates it into a flexible, private student loan option. Rather than paying back your loan with the same monthly payment (or potentially a higher one if you have a variable rate loan that creeps up), your monthly payment is calculated as a percentage of your future income. 

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There’s an income threshold so that you don’t have to make payments if your salary falls under the minimum. Stride also comes with a set payback period. You only have to make payments for so many months and you’ll never have to pay more than twice your borrowed amount.

Here’s a hypothetical scenario of how Stride could work for a borrower. Say you took out a $20,000 student loan and agreed to pay 4% of your salary over a five-year period after graduation. If your first job out of college paid $50,000, you would gross about $4,165 per month (before taxes and any type of health insurance or retirement). With a 4% fee, your monthly payment would be just over $165. If you got a raise, your Stride payment would increase as well.

Learn more about Stride or read our full review.

Ascent Student Loans

  • Best Student Loans For Bad Credit - AscentDirect lender – Yes.
  • Origination fees – No.
  • Loan term – Up to 20 years.

Ascent Student Loans makes it easy to apply online for your private loans. You can start by getting pre-qualified with no credit check. Then you’ll look at your offers and customize the loan terms based on your needs (like choosing a longer term or a fixed versus variable rate). Next, you’ll upload electronic copies of your documentation. If you’re approved, the funds will be disbursed.

You can opt to apply with or without a cosigner for Ascent student loans. If you don’t have a cosigner, you’ll need a credit score of at least 680. Loans can go as high as $200,000. 

Repayment terms depend on your rate. With a fixed-rate loan, you’ll have up to 12 years to repay the loan. Variable-rate loan terms can last between 5 and 20 years. 

One unique benefit of Ascent Student Loans is that you can release your cosigner after you’ve made 24 consecutive payments. Most other lenders make you refinance the loan in order to drop the cosigner, but you can do it with Ascent Loans while still keeping your same loan terms. 

Learn more about Ascent Student Loans or read our full review.

Funding U

  • Best Student Loans For Bad Credit - Funding UDirect lender – Yes.
  • Origination fees – No.
  • Loan term – 10 years.

Funding U helps you get a private student loan without a cosigner. Loan amounts range between $3,000 and $10,000 each school year. This is a smaller amount than other lenders, but it can help with any gaps you have in financing your college education. 

Since your loan application doesn’t include a cosigner, Funding U looks at other criteria, including your academic achievement, course load, your estimated time to graduate, job experience, and projected earnings. 

They’ll look at your ID, transcript, and resume during the decision-making process. If you’re approved, Funding U disburses the loan funds directly to your school, with half the payment made for the fall semester, and half made for the spring semester.

Learn more about Funding U.

CommonBond

  • Best Student Loans For Bad Credit - CommonBondDirect lender – Yes.
  • Origination fees – No.
  • Loan term – Up to 15 years.

CommonBond stands out as having multiple repayment options to choose from while you’re still in school. You can defer payments completely, although interest will continue to accrue and will be capitalized once you graduate (meaning it becomes part of your loan balance that interest is charged on). Or you can pay $25 a month, pay interest only, or opt for full monthly payments.

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In addition to undergraduate student loans, CommonBond also provides funding for graduate, MBA, dental, and medical programs. 

When you take out a CommonBond student loan, you’ll be paired with a Money Mentor for free. This advisor is available to help you manage your money while you’re in school. They can offer budget advice or help with things like finding a part-time job or internship.

Learn more about CommonBond.

What are student loans for bad credit?

Student loans for bad credit are designed to help you finance your college education regardless of your credit history. In most cases, federal student loans are a smart option to consider before exploring a private lender. Most federal programs don’t require a credit check, but you do have to meet certain citizenship and academic requirements. And for many college students, federal student loans don’t cover the full cost of college.

Private student loans for bad credit can help with that financial need, especially since they’re used for a specific purpose and with the understanding that the primary borrower doesn’t have much (or any) income yet. 

Why should you use student loans for bad credit?

Bad credit student loans are typically used to meet financing gaps you don’t receive through financial aid packages. You may not have access to a cosigner with a strong credit history or income to help you qualify for standard student loans.

Read more: What Does Being A Cosigner Really Mean?

Why shouldn’t you use student loans for bad credit?

Try to avoid a bad credit loan if your financial aid package and scholarships cover your tuition and expenses. Most federal student loans come with better rates and terms compared to private loan options. If that money is enough to cover most or all of your college costs, you’re probably better off avoiding this kind of student debt. 

Most important features of the best student loans for bad credit

Take a look at some of the most important features to consider when comparing your student loan options.

Interest rate

Student loans come with either a fixed interest rate or a variable interest rate. A fixed rate might sometimes be a little higher, but it comes with the security of always having the same monthly payment.

A variable rate often starts low, but it’s tied to some type of interest rate index. If that rate changes, your rate can change as well, usually either monthly or every three months. This can cause higher interest rates and a larger loan balance over time.

In addition, make sure you take notice of any fees (like an origination fee, for example). Any additional fees will also tack on an extra cost you should account for.

Repayment options

While a federal loan typically doesn’t require payments until after you graduate (with some loans even subsidizing the accrued interest), private student loans vary in how they handle your time in school. Check to see what payment options are available. Typical options include making full payments, paying interest only, or deferring payments — although that usually means your interest will keep accruing and cause a larger loan balance. Not all lenders offer the same choices, so it’s important to know your financial commitments while in school so that you can meet them.

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Grace period

Finally, take a look at whether or not a grace period is included in your private student loan offer (a federal student loan has this period built in). Some lenders may defer payments for three months after graduation, giving you time to find a job and get settled in your new life.

If a grace period is available, also find out how interest accrues. It may be smarter to start making the payments if you can. That way you can avoid growing your balance if interest is charged and capitalizes. 

Read more: Understanding Student Loan Grace Periods, Deferment, and Forbearance

How to improve your credit score

There are several ways you can build your credit score, whether you’re still in college or already graduated. Follow these tips to avoid long-term damage and actually improve your score over time. 

Read more: How To Improve Your Credit Score, Step By Step

Pay your bills on time

Payment history is the most important contributor to your credit score. Any type of loan or credit product is typically reported on your credit report.

On-time payments boost your score, while late payments over 30 days or more will hurt it. Things like your cell phone bill may not be reported regularly, but any delinquent accounts that go to collections could cause some serious damage. 

Avoid applying for tons of credit

Your credit score dips a few points every time you apply for a loan or a credit card and the lender performs a hard pull on your report. Stick to applying for credit opportunities that are designed for your current credit profile. Also, look for creditors that extend an offer or pre-qualification without doing a hard credit check. 

Keep balances low

Large credit card balances result in a high credit utilization ratio, which ultimately causes your score to drop. Having a credit card can be a great tool in building a positive credit history, but only if you use it wisely. Avoid carrying large balances from month to month. Instead, try to only charge what you can pay off in full. It’ll help your credit score and save you money in interest over the long run. 

Summary

It’s definitely possible to finance your college education with student loans, no matter what your credit history looks like. Explore some of the best student loans for bad credit so you can move forward with your degree and not worry about how you’re going to pay for it.  

Make sure to always start with a federal student loan first, though, since those come with way lower interest rates.

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