College | February 15, 2023 | Rob Zodda
Credit—the ability to borrow money and then pay it back with interest — is a fact of life. Whether the lender is a bank, a store, or a car dealer, they’ll want to make sure that you’re going to pay back your loan. That’s why they’ll review your credit history when you’re applying for a car loan, mortgage—or even a student loan. The tricky thing is that many students haven’t had enough time to develop a credit history of their own before they begin college.
Here are a few ways you might be able to get a loan without any credit.
Federal undergraduate student loans are given out by the U.S. government and don’t require a credit check (though federal loans for parents and graduate students do). To apply for federal student loans, you need to fill out the FAFSA® (Free Application for Federal Student Aid) every year you attend school. It’s your ticket to grants, work-study funds, and federal loans.
According to the Department of Education, more than $112 billion in federal student aid is given out to help more than 10 million students pay for college and career school each year.
The federal student aid is given out on a first-come, first-served basis. Make sure you submit your FAFSA® as early as you can each year (usually October 1).
Make FAFSA.gov your go-to source for all things FAFSA®.
Unlike federal student loans, private student loans come from banks and credit unions—and they require a credit check.
If you’re a high school or college student with a limited credit history, a private student loan lender may not approve your application. Don’t take it personally! If you look at it from their point of view, there’s not much proof that you’ll be able to repay a loan on time—especially if you don’t have a regular salary or other financial assets.
Consider applying with a creditworthy cosigner, an individual with strong credit who can take responsibility for the student loan with you. Cosigners are usually parents, but they don’t have to be. Your cosigner doesn’t even need to be related to you.
When asking someone to cosign a loan for you, make sure you both understand what it means. A cosigner isn’t just adding their name to a piece of paper—they’re signing a legal agreement that makes them equally responsible for repaying the loan.
You and your cosigner need to be clear on who’s going to make the loan payments each month. If it’s you, and you fall behind on your payments, your cosigner’s credit score may be affected.
Being a cosigner is a serious commitment, but it doesn’t need to be a lifelong one. Many private student loan lenders let you release your cosigner after you’ve proved you can repay your loan responsibly with a certain number of on-time payments.
If you don’t have strong credit yet, you’re not alone. A lot of college students don’t. Don’t panic. Just be sure to get the most of federal student aid you can by filling out the FAFSA®, then explore other options if you need to.