Many student loan borrowers turn to private student loans if they need additional funding after financial aid and federal student loans. If you are going to be applying for a private student loan, you may be curious, what credit score is required for private student loans?
The credit score required for a private student loan varies by each individual lender. In general, most lenders require at least a credit score of 650 to get approved for student loans. The higher your credit score, the more likely you are to be approved for a private student loan.
Your credit score also affects the interest rate you are offered. If you have excellent credit and a high score, you may be offered a lower interest rate, saving you money on your loan. For federal student loans, all borrowers are offered the same rate – your credit score means nothing.
In addition to your credit score, private student loan lenders are also going to consider the following:
- current income
- debt-to-income ratio
- field of study
- year in school
Many private student loan borrowers don’t qualify on their own, due to a limited credit history. If that’s the case, there is always an option to ask a responsible family member to cosign your private student loans. More than 90% of private student loans to undergraduate students and more than two-thirds of private student loans to graduate students require a creditworthy cosigner.
If you are comparing private student loans, Credible is a good tool that allows you to compare multiple loans at once.
Before you borrow any student loans, be sure you are exhausting all other options, including scholarships, grants, employer tuition assistance, tuition installment plans, student employment and other resources. If you do need to borrow, federal student loans are a better option since they come with many benefits. These include the potential for student loan forgiveness, an option to make payments based on income and options to pause payments during job loss or economic hardship.
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