Top Tips On How To Get a Student Loan With No Credit
Wondering how to get a student loan with no credit? All over the country, college tuition costs are rising. As a result, you may need to apply for a loan to pay for your education.
Don’t have any credit? Not sure what kind of loan you qualify for?
You’ve come to the right place.
Keep reading for some tips on how to get a student loan with no credit.
Types of Student Loans
Before we talk about how to get a student loan with no credit, let’s quickly cover the most popular types of student loans that you can apply for.
Stafford Loans are a type of federal student loan, and they are typically considered the best option for first-time students.
These loans come in two forms: subsidized and unsubsidized.
With subsidized loans, you don’t have to make any payments on it until you graduate. While you’re in school, the government will pay your interest for you.
Unsubsidized loans also defer payments until you graduate. However, will have to pay off all the interest.
PLUS loans are another type of federal student loan. They come in two forms: Parent PLUS loans and Grad PLUS loans.
Parent PLUS loans are for parents of dependent undergrad students. Grad PLUS loans are specifically for graduate students.
PLUS loans have a fixed interest rate and no maximum amount. Utilized for any education costs that other forms of financial aid do not cover.
Private loans are an option for students who need additional help paying for the costs of their education or don’t meet the requirements for a federal loan.
These loans are not subsidized, and some of them require payments while you’re still in school.
How to Get a Student Loan with no Credit
If you don’t have any credit, there are few different ways you can pay for your education. Some of the best options include:
Focus on Federal Loans
If you’re worried about how to get a student loan with no credit, your first option should be a federal student loan.
Stafford loans don’t require a credit check. This is because they’re backed and insured by the federal government.
PLUS loans do require a credit check. But, the requirements are not as strict as those put in place by private lenders.
They’re worth trying for, especially if you’re in a position where you simply don’t have any credit but also don’t have any other negative marks working against you.
Look at Local Banks and Credit Unions
Major banks and lenders often have very strict eligibility requirements for student loans. However, smaller local banks and credit unions tend to be a little more flexible.
There are lots of online tools that make it easy for you to compare lenders in your area. Check them out so you don’t have to waste time visiting each bank and credit union individually.
Seek Out Alternative Credit Checks
Another option is to look for lenders that offer alternative credit checks.
These kinds of checks still look at your credit history. But, they also take into account other factors, like your academic performance and future job prospects.
Get a Cosigner
Students who are not sure how to get a student loan with no credit can also try to find someone with good credit to cosign their loan.
If you do go this route, make sure you find a cosigner who takes the obligation seriously. After all, they’re putting their credit at risk by co-signing for you.
Building Credit as a Student
If you don’t have any credit when you start college, you should start working on building up credit as soon as you can.
This will make things much easier for you when you apply for loans in the future.
Become an Authorized User
One option for students to build credit it to become an authorized user on one of their parents’ accounts.
With this option, parents can monitor their children’s spending and help them learn good money management habits.
As a student, you can also “piggyback” off your parent’s credit score. If they have good credit, yours gets a boost when you use their card.
Get a Credit Card
Another option is to simply get your own credit card.
Keep in mind that not all cards are created equally. You’ll need to do your own research and make sure you get a card that will provide you with the greatest number of benefits.
Look for a card with a lower interest rate, now annual fees, clear billing policies, and a reasonable limit. Many lenders offer credit cards geared specifically toward students that offer all these features.
If you don’t qualify for a regular credit card, you can try applying for a secured card. This kind of card is attached to your savings account. Over time, if you pay your bill responsibly, you should be able to qualify for a regular card.
Use Your Credit Card Well
No matter what type of credit card you obtain, it’s important to use it properly from the very beginning.
Some good habits to get into to establish good credit include:
- Paying your balance in full each month
- Using your card regularly so your account doesn’t get closed
- Using your card for small, recurring charges
In addition to using your credit card well, you’ll also want to make sure you’re generally managing your finances properly.
Credit bureaus are starting to pay attention to things like on-time rental payments, utility payments, and even traffic fines.
Don’t Abuse Your Student Loan
If you do qualify for a student loan, you should also use it as an opportunity to build your credit.
Many people end up using their loans to pay for things other than their education.
Because they don’t have to repay the loan until after they graduate, they convince themselves that they have plenty of time to get their finances in order. This definitely isn’t always the case, though.
Borrow only as much as you need to pay for your tuition and fees to keep your balance as low as possible.
Once you start repaying your loan. Make sure you pay at least the minimum each month and always pay it on time.
Want to Learn More?
You now know how to get a student loan with no credit. Are you interested in learning more about managing your finances and building credit?
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