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Building a healthy credit history can take years of dedication and good financial management – something the typical college student may not have under his belt.
Since the average student enters college in their late teens, they usually don’t yet have a significant credit score or financial history. Depending on the type of loan, it is always possible for them to borrow money for their studies.
Here’s how to get a student loan without a co-signer or a credit check, and how to get the financing you need if you have a limited credit history.
You can also consider taking out a private student loan. Credible allows you compare private student loan rates from multiple lenders, all in one place.
1. Complete the FAFSA
The very first step for any college-age student in need of funding is to complete the Free Application for Federal Student Aid, or FAFSA. This is a form you complete each year that your school and the U.S. Department of Education will use to determine the amount of funding you are eligible for – based on factors such as your school’s income and school expenses. your family – and the type of student loans you can leave.
If you’re looking to take out student loans without a credit score or strong credit history, you’ll likely look to federal loans. The FAFSA is a mandatory first step towards eligibility and access to federal student loans, so it is important to complete this form as soon as possible.
Students or parents can complete the FAFSA. You will need to provide certain personal and household information, such as:
- Your date of birth and social security number
- All the schools you’re considering, even if you haven’t applied yet
- Your family and household demographics
- Income tax information for yourself and your parents (this is needed in some cases, even if you don’t live at home)
To learn more about the FAFSA and start the process, visit the StudentAid.gov website.
ARE THERE ANY FAFSA INCOME LIMITS?
2. Check your eligibility for federal student loans and financial aid
Once your FAFSA has been received and processed, each school you have included in the form will send you a letter of eligibility and financial aid once you have been accepted into that institution. This letter will tell you what federal loans you qualify for, any other financial assistance you may receive, and give you an idea of your shortfall.
Federal and private working student loan very differently, so it’s important to exhaust all federal student loan options available to you first and foremost, before taking out private student loans to pay for your college education.
Federal student loans offer the following benefits:
- Federal subsidized and unsubsidized loans are not credit dependent, so you can take them even if you have bad credit or a limited credit history.
- These loans have fixed (and often competitive) interest rates, which are set at the time the loan is disbursed.
- Federal borrowers may be eligible for income-contingent repayment (IDR) plans and student loan forgiveness in the future.
- If you run into financial difficulties later, federal loans offer forbearance and deferment options.
The government will pay all accrued interest on subsidized federal loans while you are still enrolled in school and during your grace period, so these are the first loans you should take. You will pay interest accrued on unsubsidized federal loans while in school. But since these are not credit-based loans, they should be your next choice if you have no credit.
If you need private student loans, visit Credible for compare private student loan rates from various lenders in minutes.
3. Compare private student loans
Once you’ve exhausted all of your federal student loan options, accepted any scholarships or grants available to you, and drawn down any college savings, it may be time to consider private student loans to cover the rest.
Private loan servicers can be any number of financial institutions, such as banks, credit unions, or online lenders. These lenders set their own requirements for credit eligibility, borrowing limits, and interest rates, so it’s important to compare them carefully before you apply.
You will want to consider each private lender:
- Loan terms (how long you have to repay the debt)
- Grace period (how long do you have left after graduation or withdrawal from school before repayment begins)
- Interest rate (including fixed or variable terms)
- Discounts or benefits, such as cash back for good grades or an interest rate deduction for making automatic payments
- Eligibility requirements (usually a minimum FICO score or annual income amount)
In most cases, if you have no credit, bad credit, or little or no income, you will not be able to take out a private student loan without a co-signer. This co-signer – who can be a parent, grandparent, sibling, spouse or other consenting adult – signs your loan and agrees to repay it if you are unable to do so.
Paying for college is an expensive undertaking, often requiring the assistance of federal and private student loans. Knowledge how to get a student loan is one step in this process, but understanding your options and limitations if you have no credit is another. Fortunately, there are plenty of options available for student borrowers (and their parents) with limited credit scores – you just need to know where to look.
With Credible, you can compare private student loan rates without affecting your credit.