Private Student Loans for Bad Credit

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Private loans are a great way to supplement for costs you do not already have covered through scholarships or federally-backed products. They have the highest limits and can be used for a variety of purposes beyond tuition. For those who are struggling with a bad FICO score, there are still options for private student loans for bad credit borrowers.

While many options are designed for students coming out of high school with no established credit history, these products can also be useful for those who are going back to school and whose credit has taken a hit. In this guide, we will go through the ins and outs and show you how to get the best rate possible.


We Cover in This Guide

  • What do private student loans for bad credit borrowers look like?
  • What are the types of products available?
  • How to get a better interest rate on private student loans
  • How to apply
  • FAQ

What do Private Student Loans for Bad Credit Borrowers Look Like?

Most creditors consider a bad score to be one below 630. Some private lenders, however, have no minimum and others start around 540. It is important to provide all the information you can in order to be approved at a competitive rate. The good thing for those with weak credit is that private lenders use the borrower’s future ability to repay, whether they have a cosigner, and other factors in addition to the score. These products can be furnished through a bank, credit union, or alternative online lender.

What are the Types of Private Student Loans Available?

There are two types of private student loans: minimum credit and no credit loans. The advantage of choosing one with a minimum requirement is that you will get a better interest rate as long as you meet the threshold score (around 540). The obvious benefit of a no-min private student loan is that you can be approved with poor credit or an unestablished history, as is the case with many students coming out of high school. Interest rates can be fixed or variable.

Loan Type Min Credit Score Pros Cons
Minimum Credit =+/-540 Private loans cover costs others will not. Flexible repayment terms. Better rates than no credit options. Better score required for a decent rate
No Minimum Credit NO MIN Private loans cover costs others will not. Credit score not evaluated for approval. Flexible repayment terms. Higher interest rates. Co-signer usually required for a reasonable rate.

Check your score to determine which option best suits your situation. Next, we will go through some ways you can improve your standing and get the best rate possible.

How to Get the Best Interest Rate

One advantage of private student loans for bad credit borrowers is that lenders use other factors beyond a FICO score to determine risk. The downside is that the rates can be pretty high. Here are a few things you can do about it.

  • Secure a cosigner - This is the easiest way to improve your interest rate if your credit is poor. Some lenders will require a cosigner no matter what in order to alleviate risk; they may determine that there is less of a likelihood that it will be repaid if the borrower is unable to land the right job. Even if you are able to qualify without one, a co-signer with a solid history and score can get you a much better rate.
  • Shop around - There are many options and lenders for private products. Check rates and terms with various providers before you decide.
  • Refinance down the road - If you are unable to secure a good rate upfront, refinancing can be an excellent solution for later on. For it to make sense, your credit score will need to improve to the high 600s. As with the initial loan, you can add a cosigner to improve your qualifications.

At this point, you should calculate what you want your payments to be and how much you will need to cover costs. Here is what you will need to complete the process.

How to Apply for Private Student Loans

The first step to applying for private student loans is shopping around for the best product.

Compare rates from top lenders and get pre-qualified:


After that, here is a list of what you will need to submit the application.

Loan Application Checklist

  • Complete enrollment in your college or university
  • Have personal info on hand including your social security number and address
  • Have financial info on hand including annual income(s), tax returns, employment history, pay stubs, and any assets you may have.
  • Secure a personal reference
  • Secure a co-signer (if applicable)

If you are still not sure what to do, review these frequently asked questions so you can be prepared and apply with confidence.


Q: Are there alternative products besides private student loans for bad credit borrowers?
A: Students should first apply through the federal loan program. These options do not have a minimum credit score requirement and offer good rates. The downside is there is a limit to how much they can cover, which is where private products can fill in the gaps. State and institutional loans furnished through the school can be advantageous as well and offer unique terms and benefits. For more information about all that is available, click here.

Q: How much will a private student loan cover?
A: Unlike federal loans, which are capped at $57,000 in total, private products are designed to supplement any additional costs associated with enrollment. While these amounts vary by school, many options cover up to $200,000 over the term of enrollment, with some covering $500,000 or more.

Q: Is a cosigner a good idea?
A: Having a cosigner is the easiest way to improve your credit situation and get a better rate. They can be a friend, relative, or anyone willing to stand behind the loan along with you. Make sure that you are on the same page with any individual you ask to be a cosigner, as they are fully responsible to repay if you are unable to do so.


Private loans can be a great way to make college a reality even if your credit is less than ideal. Once you have applied through the federal program, determine whether there are gaps that still need to be filled. Review what is available through your state or even your college, and compare those options to the benefits and flexibility of a private option.