The short answer is “No”. Your credit score doesn’t directly affect your financial aid.
Having a solid credit history and maintaining it can have a dramatic impact on your quality of life now and 40 years from now. The good news is, having bad credit or no credit won’t stand in the way of receiving federal financial aid!
The first step to receiving financial aid is to file the Free Application for Federal Student Aid (FAFSA®).
Federal student loans are no different…
The beauty of filing FAFSA® is, everyone is eligible for federal loans. These loans are available for students and their parents without a credit check. Therefore, families with a low credit score or students with no credit, are more likely to qualify for financial aid without a loan cosigner.
Regardless of credit score, everyone who gets a federal loan gets the same interest rate, which is generally much lower than private loans.
You are eligible for federal loans as long as you file your FAFSA®.
Private loans are a different story
Private lenders will check your credit history to make sure you’re reliable for the loan repayment periods. If you have a low credit score or no credit at all, you will most likely need a cosigner. With a cosigner, you’ll be able to take out private student loans to cover the full cost of attending college.
Do you want to know which student loans don’t require a cosigner? If so, click here.
A low credit score, or lack thereof not only affects eligibility, but it also affects the interest rate and repayment terms. Many lenders may not be willing to lend you money based on your credit history. You may have a higher interest rate and stricter repayment terms than those with good credit scores.
On the bright side, there are numerous student loan options out there for those with 0 to low credit.
All things considered, college funding may be one of the only places where having a poor credit history is a good thing. Often times, a poor credit history implies low income and financial needs, which in return will allow your family to receive more financial assistance from public sectors.