Required Credit Score for Private Student Loans — What to Know

The credit score needed to qualify for a private student loan varies between lenders. Generally, you need at least a good credit score to qualify for a private loan, although some lenders might allow you to qualify for a loan with a lower score.

Lenders typically keep credit and other lending requirements close to the vest. Your credit score also plays a significant role in the kind of rates you might be offered and other loan stipulations.

Here's a closer look at the credit score requirements for private student loans, how to know if you qualify and tips for improving your approval odds.

Do you need good credit to get a student loan?

Generally, you need good credit to get a private student loan, but that's not the case with most federal loans.

Federal student loans

Most federal student loans don't carry credit requirements. The exceptions to this rule are for Direct PLUS Loans. The Department of Education performs a credit check on PLUS Loan applicants. If you have an adverse credit history, you might only qualify for a PLUS Loan by meeting the following borrower stipulations:

• Obtaining a creditworthy endorser (similar to a cosigner), or
• Providing the Department of Education with proof that your adverse credit was due to extenuating circumstances.

You’ll also need to complete mandatory credit counseling.

Because most federal student loans don’t require credit checks, borrowers should max out federal loans options before applying for a private loan.

Private student loans

Generally, you need good to excellent credit to get approved for private student loans. Unfortunately, most college students haven't had enough time to establish the credit history needed to earn a good credit score.

Some private lenders allow borrowers to qualify for loans through the use of a creditworthy cosigner. A cosigner assumes financial responsibility if you can't repay your loan. Typically, a cosigner is someone close, like a family member, friend or mentor.

Your credit score also determines what kind of interest rate and terms you receive, so having a higher credit score can often save you money or lessen your monthly payments.

What’s a good credit score for private student loans?

Private lenders typically look at your FICO credit score when determining eligibility for lending. Credit scores aren't the only factor lenders consider when approving loan applications, but it's a good indicator to reduce lending risks.

The majority of lenders use FICO scores when determining eligibility. FICO Scores were created by the Fair Isaac Corporation over 30 years ago. Scores range from 300 to 850.

The three-digit number is based on information found on your credit report. Most lenders require a good credit score; for FICO, that’s a score of 670 or above.

FICO score range	Rating
300-580	Poor
580-669	Fair
670-739	Good
740-799	Very good
800-850	Exceptional

Lenders view credit scores as an indicator of how likely a borrower is to repay a loan. Not only do lenders use credit scores to determine eligibility, but they're also used to set interest rates and determine loan amounts and terms.

How to know if you qualify for private student loans

With so many lenders and private loan options, it can be hard to know whether you qualify. Some lenders allow you to check rates before applying through a soft credit check, which doesn't affect your credit score. You might not be approved even if you prequalify for a private loan.

Private lenders perform a hard credit check during the application process, which might temporarily cause your credit score to drop a few points. You must meet a lender's credit and other underwriting requirements to qualify for a loan.

Although you can't know for sure if you’ll qualify until you apply, you can perform the actions below to give you a better idea of where you stand in the eyes of lenders.

Know your credit score and review your report

Your FICO credit score is one of the most important factors lenders consider when determining eligibility. Knowing your score gives you insight into where you stand. Your bank or credit card issuer might offer free access to your credit score. You can also see your score through free credit monitoring services, like CreditWise from Capital One or Experian CreditWorks.

It's also good to review your credit report. These reports go beyond your score to give lenders specific insights into your financial history, including past payment history. If you've had late or missing payments, defaulted on a loan, or other negative marks, they’ll appear on your report.

Credit reports might also contain errors that could affect your credit score. Scan your report to look for any false or incorrect information. You can file a dispute with the credit bureau if you find errors.

U.S. consumers can receive a free credit report from all three major credit bureaus once every 12 months at AnnualCreditReport.com. In response to the COVID-19 pandemic, the site is temporarily offering consumers free weekly reports upon request.

Check the lender’s legal borrowing requirements

Lenders might not disclose specific credit requirements publicly, but often you can find general lending requirements on a lender's website. Use the available information as a guide when applying for a private student loan.

Examine your income and current debt

Lenders may also consider income and debt-to-income ratio when approving loan applications. Lending money is risky, so lenders often try to mitigate the risk by approving borrowers who they are confident have the financial means to repay a loan.

Your debt-to-income ratio is your monthly income compared to recurring monthly debt payments, like credit cards and other credit accounts.

Get private student loan rate quotes

Perhaps the best thing you can do as a borrower is shopping around. Don't apply for the first student loan in your search. Instead, compare multiple lenders to find the best rates based on your personal and financial information.

Comparing lenders also gives you a better idea of how lenders view you, what's available, and the requirements you need to meet to get a private student loan.

3 ways to increase your approval chances

You might not know in advance whether you'll qualify for a loan, but there are steps you can take now to improve your chances when you do apply for a loan. Consider the following three tips to improve your odds of success with private lenders.

Apply with a cosigner

If your credit isn't up to par, many lenders allow you to qualify using a cosigner. A creditworthy cosigner can help you get approved and qualify for a much lower interest rate than you may receive on your own.

Your cosigner’s on the hook financially if you can't repay your loan. Make sure you're in a place financially to make regular loan payments. Some lenders offer a cosigner release which releases cosigners from financial obligations after the primary borrower meets certain requirements. For example, when the borrower makes a set number of consecutive, on-time monthly loan payments.

Improve your DTI

Lower your debt-to-income ratio to improve your chances of approval. Start by paying down existing debt. Also, avoid adding any more new debt until after you've received a loan. Increasing your income can also improve your DTI, whether it's taking on more hours at work, asking for a raise, or adding a side hustle to the mix.

Use a lender with loan options for borrowers with bad credit

Not all lenders require good to excellent credit to qualify for a loan. Search for lenders that offer private student loans for bad credit.

Keep in mind that you may qualify for a private loan through these types of lenders, but it's likely you will end up with higher interest rates which can add to the total cost of your student loan. You can always refinance your student loans later as your credit improves to score a lower interest rate.

FAQ: Credit score for private student loans