What Credit Score Do You Need to Get a Private Student Loan?

 May 28, 2020
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While most federal student loans don’t have credit requirements, private student loans do. So if you’re in the market for a private student loan, it’s important to know what a good credit score for student loans is.

Note that if you don’t have a strong credit score on your own, you could apply with a cosigner who does. Let’s explore what lenders look for in an application, including the credit score needed for a student loan from a private lender.

What is a good credit score for student loans with a private lender?

When deciding whether your credit (or your cosigner’s credit) is good enough, you need to know how lenders will view different credit scores:

  • Mid-600s or lower: Most private lenders won’t approve you for a student loan without a cosigner. You’ll need to rely on student loans options for bad credit, such as federal student loans or applying with a cosigner.
  • Mid-600s to 690: You’ll likely find few lenders willing to work with you, and your chances of qualifying on your own will be iffy. If you are approved, expect to pay expensive private student loan rates.
  • 690 to 720: It’ll be faster and easier to find lenders willing to work with you. Your private student loan rates will typically be closer to the middle range of rates a lender offers, too.
  • 720 and up: You could have your pick of the best private student loans out there, and your credit score will work in your favor. You may also get the lowest student loan rates.

How to find out if you qualify for a private student loan

Your credit score is a central factor that determines whether a lender will approve or deny your request for a private student loan. But these three digits aren’t the only factor that matters to lenders.

Here’s what you need to do if you have a good credit score for student loans and meet other requirements:

Check your credit score

First off, you need to know exactly what your credit score is. College students might not know what their credit score is, or whether it’s good enough to get a private student loan on their own.

Fortunately, there are a few options to check your credit score for free, such as this free credit tool from LendingTree.

Make sure you meet legal borrowing requirements

Lenders have to comply with many U.S. federal and state laws about how they can do business. On the legal end of things, most lenders set the following criteria for private student loans:

  • Be a U.S. citizen or legal resident
  • Be 18 years old or older
  • Use student loans only for educational expenses
  • Show that you’re enrolled at least half-time in an educational program that qualifies

Some lenders will only extend private student loans to residents of certain U.S. states, or to enrollees at specific colleges. Before applying, check the lender’s requirements to be sure you meet them.

Look at your income and debt history

On top of evaluating your credit score for student loans, lenders also set financial and employment criteria. Private student loan lenders look at the following factors to try to gauge if you can afford to repay this debt:

  • Credit history: Besides your credit score itself, lenders will look at your credit report for derogatory marks, such as late payments, delinquent accounts and bankruptcies. They’ll also want to see a mix of credit accounts with histories of on-time payments.
  • Employment and income: Not all students have a job — but if you’re a student who has one, it can improve your chances of approval. Most lenders will ask for proof of employment and income, such as a recent pay stub.
  • Debt-to-income (DTI) ratio: Lenders also will compare your income to your monthly debt costs to make sure you can afford additional payments, with consideration of debts like your credit cards or even your housing costs (rent or mortgage). A lower DTI can suggest to lenders that you have control of your finances; a higher one may result in difficulty obtaining a loan.They usually want to see a DTI of 2 lower 8% or lower Use our DTI calculator to estimate yours.

Request private student loan rate quotes

Each lender has its own credit score requirements for private student loans, which aren’t always advertised. One of the best ways to know if you’ll qualify for a private student loan with a specific lender is to apply for a loan rate check.

Lenders usually can perform a soft credit check to generate a rate estimate. However, some might not, so you should double-check whether it’s a soft or hard credit inquiry before you allow the lender to perform it. If it’s a soft inquiry, it won’t affect your credit score.

Once the lender figures out whether you qualify, it will list out all the rates it can offer you. Or, if you don’t qualify for a private student loan, you can find that out without a hard credit check that could lower your score.

Should you apply for a private student loan with a cosigner?

The reality is most college students can’t meet the required credit score, income or other borrowing criteria lenders set. But if you don’t have a good credit score for private student loans, that doesn’t mean they aren’t an option.

One solution is to apply for private student loans with a cosigner. By doing so, you can:

  • Get the good credit of a parent or other cosigner
  • More easily qualify for the loan
  • Get better interest rates

Not only are cosigners common, but some lenders, like Ascent and CommonBond, won’t accept private student loan applications without them. Other lenders allow borrowers to apply with a cosigner if they don’t meet credit and income qualifications on their own.

Don’t forget to find out if your lender offers a cosigner release and under what terms. Citizens Bank, for example, allows a primary borrower to release a cosigner after making 36 on-time monthly payments.

Do lenders view graduate students differently?

If you’re pursuing an advanced degree, you might have an easier time securing private student loans for grad school. That’s because, per the Consumer Financial Protection Bureau, “as a graduate or professional student, you might be more certain of your job prospects and earning potential.”

Graduate students also are more likely to have an employment history of high salaries, especially if they spent a few years working after completing their undergraduate degree. They tend to have longer credit histories as well, allowing lenders to get accurate insights into the applicant’s financial management.

Additionally, several lenders offer private student loans specifically to graduate students that carry different requirements. CommonBond, for instance, requires cosigners for both its general undergraduate and graduate student loans. However, it has no such requirement for its MBA student loans.

Many lenders offer student loans specifically for students in MBA, medical, dental, law or other graduate programs that can lead to high-paying careers.

Bottom line: Good credit is needed for private student loans

It’s a smart idea to utilize federal student loans first, as they don’t have a credit requirement. But private student loans can be an important tool to fill in gaps in college costs. You or a cosigner must have a good credit score to get student loans from a private lender.

If you need student loans now, enlisting a cosigner is the way to go. But it’s never too early to start building credit and improve your chances of qualifying for student loans in the future.

Rebecca Safier contributed to this article.

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