If you have bad credit, you'll likely need a co-signer to apply for a private student loan. Some lenders offer loans with no credit or cosigner requirements, but their interest rates are higher. There is no credit check for federal loans for undergraduate students. No, most federal student loans have no credit rating requirements.
Therefore, the FAFSA application process does not include your credit information. However, a good credit score is often needed when applying for private student loans, which are provided by banks, credit unions, and online lenders. PLUS loans are the only exception; these loans will test your credit, even though they're only looking for an adverse credit history and have no minimum credit rating requirements. Since your credit plays a key role in the approval process, it's wise to make sure your credit score is in the best possible shape before applying for a new private student loan.
If you're in this situation, here are a few things to know about the loan options available to students, especially if you don't have a credit history or have a poor credit history. The problem that many students face is not an irregular credit history, but the fact that they simply haven't had enough time to create a credit history. If you must resort to private loans and you have bad credit and don't have any co-signers, lenders that consider factors beyond credit are your best option. Most federal student loans don't require a credit check to qualify for funding, so bad credit won't be an obstacle in most cases.
In that case, consider private student loans aimed at students with bad credit or no credit history. If your student loan was your oldest credit card, for example, canceling it could reduce your average credit history. And applying for a student loan with bad or no credit can complicate things even more. Because personal loans often depend on your creditworthiness, having bad credit or no credit could affect your eligibility and your interest rate.
If you have poor or fair credit, typically a credit score lower than 670 under the FICO scoring model, prioritize federal student loans, which don't require a credit check.