In one of our recent blogs, we answered this very commonly asked question.
If you’re a student with no credit history, you might be wondering if you can still get approved for a private student loan. In many cases, the answer is yes.
Many students can qualify for a private student loan even with no credit history. Typically, lenders look for added support (like a cosigner) or other indicators that the loan is likely to be repaid. Here are three common paths:
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Apply with a cosigner. This is the most common route for undergraduates with limited credit or income.
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Choose a no-cosigner loan (if available). Some lenders consider factors beyond a traditional credit score, such as your program, year in school, or income.
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Limit private borrowing while you explore alternatives. You may be able to close the gap with federal loans, scholarships, a school payment plan, or a lower-cost enrollment option.
Other aspects to consider:
Will I have a credit score if I have never used credit?
Not always. Some students have no score at all, while others have a thin file that produces a score. Either way, many lenders will want more support for the application, most commonly a cosigner.
Does having a part-time job help me qualify?
It can, especially for lenders that consider income as part of their review. Still, many undergrads need a cosigner even with income, and approval can depend on how much you want to borrow.
Can a private student loan help me build credit?
Yes, on-time payments can help build credit over time if the lender reports to the credit bureaus. The catch is that missed payments can also hurt, so only borrow what you truly need and choose a payment plan you can stick with.
When should I consider federal loans instead?
If you have not filled out the FAFSA yet, start there. Federal student loans are typically easier to access for undergrads and come with protections like income-driven repayment and potential forgiveness options for eligible borrowers.