Two pencils sitting on a student loan application, with colored paper clips next to it

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Your payment history and credit history are two major components that go into calculating your credit score. If you're fairly young and have never had bills or accounts in your own name, you may not have that high of a credit score as a result. Similarly, if you're older but previously struggled to pay bills on time, or have a high level of outstanding debt, your credit might also be poor. The question is: Will that impact your ability to qualify for student loans?

Bad credit and federal student loans

If you're applying for federal student loans, here's some good news: Your credit score won't come into play at all. That's just one of the benefits of taking out federal loans versus borrowing privately for college.

With federal loans, you'll also enjoy fixed interest rates on your loans that are regulated and capped at a reasonable limit. And federal loans are designed to help students keep up with their payments after the fact. If you graduate college and struggle to make your loan payments, you can apply for an income-driven repayment plan or even defer your loans for a period of time.

Bad credit and private student loans

It's generally best to explore your federal borrowing options before resorting to private student loans. That's because private lenders can charge as much interest as they want, and they can also impose variable interest rates that climb over time. Private student loans also don't come with the same borrower protections as federal loans, so if you start struggling with your payments, you may not get much leeway from your lender.

That said, federal student loans come with borrowing caps, and if your education costs exceed the amount you’re able to borrow, you may have no choice but to apply for private loans. And that could be tricky if your credit is poor, because private lenders will absolutely take your score into account, and if it's not good, you may be denied if you apply on your own.

However, your chances of getting approved for a private loan will increase if you apply with a cosigner -- someone whose credit is strong enough to qualify for a loan. That cosigner might be your parent, older sibling, or even a close enough friend.

Now, having a cosigner isn’t necessarily a bad deal for you, but it’s not a great deal for whoever that person is, since he or she will ultimately be responsible for making your monthly loan payments if you fail to keep up. And unless you have a parent willing to step up, finding a cosigner could prove quite difficult.

Improving your credit score

If you’re a high-schooler who’s applying to college, there may not be much you can do about your credit score until you venture out on your own and start paying some bills in your own name. If you’re older, however, and your poor credit stems from late payments and too much debt rather than an absent credit history, you can improve your score by making sure to pay all future bills on time. Knocking out a chunk of your existing debt will also help your score improve, since it’ll bring down your credit utilization ratio, which measures the amount of outstanding debt you have relative to your total line of credit.

The good news is that you don’t necessarily need great credit to qualify for student loans, provided they’re federal in nature. The better news, in fact, is that if you make a habit of repaying those student loans on time, doing so could help you build your credit, thereby allowing you to borrow affordably in the future when you need to.