The average credit score for getting approved for a private student loan
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The average borrower approved for a private student loan in 2020 so far has a credit score of 748, according to the lending platform EDU loan, which averaged 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 note on your borrowing history, and all private student loan borrowers will consider your score when you apply for a loan. The scores are on a scale of 300 to 850, in five categories, according to Experiential:
The average credit score of the student loan borrower falls into the “very good” category. According to Experian data, approximately 46% of the US population has a credit rating in the “very good” or “excellent” categories. If your score is not in this range, there are things you can do.
Federal student loans do not require a credit check for many student borrowers and may have lower interest rates than private student loans. For the 2020-2021 school year, all Federal Direct Undergraduate Student Loans will have an interest rate of 2.75%. For private borrowers in 2020, the average interest rate for a co-signed fixed rate student loan is 10.20%.
Federal student loans are usually the smartest way to borrow for college. However, there are certain situations where you might need private loans, and there are several ways to increase your chances of approval.
Consider a co-signer and work on your credit score
Most students do not have a long credit history and could earn a better interest rate by having their loan co-signed with someone such as a parent or guardian.
A co-signer is someone who takes responsibility for the loan with you, and could also be held responsible for the loan if you stop paying it. According to data from LendEDU, people were more likely to be approved with a co-signer. Of those applications with a co-signer, about 36% were approved, while only about 8.8% of those who applied without a co-signer were approved. However, it should be noted that this could be a risky decision 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 rating as well.