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The average credit score to get approved for a private student loan, according to hundreds of thousands of applications


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The average credit score to get approved for a private student loan, according to hundreds of thousands of applications

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.The average approved private student loan borrower in 2020 has a credit score of 748, according…

The average credit score to get approved for a private student loan, according to hundreds of thousands of applications

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

The average borrower approved for a private student loan in 2020 so far has a credit score of 748, according to loan platform LendEDU, which averaged together data from hundreds of thousands of private student loan applications submitted to five private student loan lenders through the site’s student loan portal. 

Credit scores are like a grade for your borrowing history, and all private student loan borrowers will consider your score when you apply for a loan. Scores fall on a scale of 300 to 850, in five categories, according to Experian

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739 
  • Very good: 740 to 799 
  • Excellent: 800 to 850

Checking your credit score should be your first step before applying for a student loan. You can access your credit score for free online

The average student loan borrower’s credit score fell into the ‘very good’ category. According to data from Experian, about 46% of the US population has a credit score in the ‘very good’ or ‘excellent’ categories. If your score is not in that range, there are a few things you can do. 

Federal loans should come first

For anyone who wants to borrow money for college, federal student loans should come before private student loans.  

Federal student loans don’t require a credit check for many student borrowers, and can have lower interest rates than private student loans. For the 2020-2021 school year, all federal, undergraduate direct student loans will have an interest rate of 2.75%. For private loan borrowers in 2020, the average interest rate for a cosigned, fixed interest student loan is 10.20%. 

Federal student loans are usually the smartest move for borrowing for college. However, there are some situations where you may need private loans, and there are a few ways to increase your chances for approval

Consider a cosigner and work on your credit score

Most college students don’t have a long credit history, and could get a better interest rate by having someone like a parent or guardian co-sign their loan. 

A co-signer is someone who takes on equal responsibility of the loan with you, and could also be held responsible for the loan if you stop paying it. According to LendEDU data, people were more likely to get approved with a cosigner. Of applications with a cosigner, about 36% were approved, while only about 8.8% of people who applied without a cosigner were approved. However, it’s worth noting that this could be a risky move for your co-signer: They could be required to repay your loan if you don’t, and any late or missed payments you make could affect their credit score, too. 

Raising your credit score is another good way to increase your chances of being approved for a private student loan. Start by checking your score for free online, and making sure there aren’t any mistakes on your credit report. Paying bills on time, reducing your current borrowing, and increasing your credit limit could help increase your credit score. 

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

Personal Finance Insider offers tools and calculators to help you make smart decisions with your money. We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners.

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