What Credit Score Do You Need to Get a Student Loan? FICO Knows.

College tuition costs are at historic highs, leaving most students with no option but to take out loans to pay for higher education. Yet, not every would-be student borrower will be approved for the full range of loans they’ll need. The credit score experts at FICO are providing some insights into what it takes to qualify for student loans these days.

The minimum credit score that you’ll need to get a student loan will depend heavily on the type of loan that you’re applying for. Below we break down the credit requirements for three of the most popular student loan types.

Direct Subsidized and Unsubsidized student loans

Students with thin credit files or damaged credit will be happy to learn that there is no minimum credit score for Direct Subsidized and Unsubsidized student loans. In fact, you won’t even need to have your credit checked during the loan application process.

Despite having no minimum credit requirements, these loans come with low fixed interest rates of 2.75% for undergraduate borrowers and 4.30% for graduates (graduate students can only take out unsubsidized loans). Borrowers also pay a 1.062% fee that is subtracted from their loan disbursement.

In addition to no credit score requirements and low rates, Direct Subsidized and Unsubsidized loans come with other federal benefits. For example, borrowers can:

• Join Income-Driven Repayment (IDR) plans

• Apply for federal forbearance or deferment

• Pursue federal forgiveness programs like Public Service Loan Forgiveness (PSLF).

Learn more about subsidized and unsubsidized student loans at StudentAid.gov.

Direct PLUS student loans

While Direct Subsidized and Unsubsidized loans offer attractive rates and terms, they also come with annual and lifetime borrowing limits. And if you’ve already hit your funding cap, you’ll need to consider other loan options.

If you’re a parent or graduate student, Direct PLUS (Parent Loan for Undergraduate Students) loans could be a strong choice. With both Parent PLUS and Grad PLUS loans, you can receive up to the full cost of attendance.

The interest rates and fees are slightly higher, but you can still qualify for federal benefits like IDR (Income-Driven Repayment) and PSLF (Public Service Loan Forgiveness).

What is an adverse credit history?

With PLUS loans, your interest rate isn’t based on credit. All approved borrowers receive the same fixed rate of 5.30%. But you won’t be eligible to borrow if you have an adverse credit history. Here’s how that’s defined:

Having one or more debts with a total combined outstanding balance greater than $2,085 that are delinquent by 90 days or more or have been placed in collection or charged-off (written off) during the previous two years; OR

During the past five years, you’ve have been subject to a:

Default determination,

Bankruptcy debt discharge



Tax lien

Wage garnishment

Write-off of a federal student aid debt

As long as none of these situations apply to you, you can qualify for a PLUS loan regardless of your specific FICO Score. And even if you have an adverse credit history, you could still receive a PLUS loan by adding a creditworthy cosigner or providing documentation of extenuating circumstances.

Private student loans

If you’ve hit your borrowing limits on subsidized and unsubsidized loans and aren’t eligible for a PLUS loan (i.e., you’re not a parent or a graduate student), you may need to apply for a student loan with a private lender.

And it’s in this situation that your credit becomes more important. With private loans, your credit will be checked. And your credit score will play a significant role in your loan eligibility and the interest rate you receive.

If you have a FICO Score at or above the “Good” range (670 and above), you may be able to qualify for a private student loan on your own. Otherwise, you’ll probably need to add a creditworthy cosigner to your loan application.

How taking out student loans impacts your credit

While a credit score may not be required to qualify for some student loans, all student loans will be considered in the FICO Scores once reported to the credit bureaus. All federal loan servicers are required to report borrower payment activity to the three major credit bureaus.

Once repayment begins, it’s important to stay current with your student loan payments to avoid late payments or a default being added to your credit report. Before falling behind, make sure that you’ve explored all your relief options first.

For federal student loan borrowers, you may qualify for federal forbearance or deferment. Or perhaps joining an Income-Driven Repayment (IDR) plan could make your payments more manageable.

For defaulted federal student loan borrowers, the CARES Act student loan legislation could help you get the default removed from your credit report.

Through December 2020, each month’s suspended payments qualify as payments towards the nine that are required to rehabilitate a federal loan.

Find out more at www.myfico.com.

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