Student Loans With No Credit

Students with no credit don’t have it easy, especially if they are international students (let’s not even talk about the visa issues). You want to get an education but it’s impossibly expensive and out of reach.

How do you get a loan? And more importantly, how do you get one without a proper credit history?

Let us show you a couple of options to consider for student loans with no credit.

What are the Types of Student Loans?

Student loans aren’t a “one-size-fits-all”. There are different options and each of them will be shaped around your risk profile. Remember to first make sure whether you are eligible for specific types of loans for students with no credit before you apply.

Here are the two main types of student loans.

Federal Student Loans

Federal student loans are issued by the U.S. Government. Its terms and conditions are, therefore, set by law and the interest rate is prescribed. Federal student loans have a nifty feature called an income-driven repayment plan which applies to some loans. Income-driven repayment means your monthly repayments are determined by your income.

You might also qualify for loan forgiveness (like public service loan forgiveness). With loan forgiveness, you repay the loan for a specified amount of time (or repayments) and after that period the balance of the loan is forgiven. This means it does not have to be repaid.

Remember, with income-driven repayment, your interest rate still applies and interest will still accumulate over the full period of time your repaying the loan.

Since lower installments mean you’ll be repaying the loan over a longer period of time, it does mean more interest will accrue over its lifetime. Despite this, however, income-driven repayment and loan forgiveness are still very attractive benefits which private student loans typically don’t offer

For international students, it’s important to take note that you do not qualify for federal student loans.

Private Student Loans

Private student loans are loans offered by registered private lenders. Usually, they require a good credit history and steady income in order to qualify. If you don’t have the right credit history, you can get a cosigner to sign with you on the loan.

It is important to be very careful and understand the terms and conditions of the private student loans you apply for. Interest rates on federal student loans are normally fixed. This is not always the case with private student loans.

How to Get Federal Student Loans with No Credit

Undergraduate federal student loans don’t require a credit history from the borrower. The amount you borrow will be determined by your course and study needs.

Federal Student Aid

To apply for federal student aid, you have to complete the Free Application for Federal Student Aid (FAFSA). Go to their website and fill in the free application form. Follow the instructions they give you upon completion. Your specific situation will determine the outcome of your application.

They basically compile packages of aid for each of the schools of your choice. This will help you to get federal student loans with no credit. FAFSA typically aids you with the fees for one year’s studies, so you have to complete an application for each year of study.

Take note it is possible that the interest on your federal loans isn’t subsidized. If that is the case, you’ll have to find alternative ways of repaying this. Either by another loan or making a part-time income.

How to Get Private Student Loans with No Credit

Private student loans generally have more requirements than federal loans. Sometimes it can be hard to qualify for one if your an international student with no credit on top of that. However, it’s possible to get private student loans with no credit.

Firstly, you can try getting a cosigner. A cosigner basically signs as security on your loan if you end up not paying. The trick here is to find someone with a good enough credit profile who is willing to help you. Make use of friends and family in the U.S. who trust you.

Alternatively, if you don’t have time to first build your credit score, you’ll have to find a lender who does not require credit history, like Stilt. They are few and far between but you ought to find a few out there.

Kinds of Private Loans

There are two types of private loans you’ll get with private lenders:

1. Peer-to-Peer loans
2. Personal loans.

Let’s take a closer look at each.

Peer-to-Peer

Peer-to-peer (P2P) lending has been in the U.S. for more than a decade. P2P lending, in short, is a marketplace where lenders (also called investors) and borrowers meet up and are connected. They bypass normal channels of credit to create a cheaper and easier form of credit. The same eligibility criteria still apply though.

Lenders want to make their returns from the people who borrow money. Only those who are trusted will receive P2P loans.

Personal Loans

A principal amount is borrowed at an interest rate from a registered credit provider. A contract is drawn up with terms and conditions and both parties adhere to it. The personal loan is considered settled as soon as the borrower repays the total loan cost (principal amount plus interest). Personal loans are known for the fact that they are unsecured which means they don’t require a form of collateral as security.

No Credit Student Loans with Stilt

As we mentioned above, lenders who don’t require a credit history is not common. But Stilt is one of them!

Stilt is a great option to consider for loans for students with no credit as Stilt doesn’t require a minimum credit score. Stilt also provides loans specifically to visa holders. So, they are especially geared to work with internationals who possess a valid visa. Only a select type of visas are eligible, but fortunately, the F-1 visa is one of them.

Why International Students Struggle to Get Loans from Big Banks

So, what makes Stilt so special and differentiates them from other traditional banks? Well, truth be told it is really difficult (if not impossible) for international students to get loans from traditional lenders like banks.

Big banks don’t generally offer loans for students with no credit – especially not if you are an international student.

Firstly, it is because of short visas and large loans. The U.S. ranks as one of the most expensive countries to study in. Tuition fees are typically high so large loans are required to fund your education. The terms for repaying these loans are often longer than an international student’s visa.

Having a study visa only ensures admittance to the U.S. whilst studying. But afterward, the loan still needs to be repaid. Lenders will shy away from lending money to people who aren’t sure of staying in America, as once you’re gone there is no way for them to get their money back.

Secondly, the fact that international students usually don’t have a credit history in the U.S. is also a problem. You most likely haven’t had the chance to build credit in the U.S. by the time you need to apply for a student loan. This is a big red flag for lenders as they don’t have a track record they can rely on.

How to Get a Stilt Student Loan with No Credit

It’s actually simple to get a loan with Stilt. Just follow the steps below.

1. Submit an Application

You can submit your application online. Within 24 hours you will receive feedback. Stilt will ask for more information if it is necessary.

Stilt’s basic criteria entail:

• Current employment or employability
• Education
• Financial Behaviour
• Defaults, Collections or Bankruptcies
• Credit Check or Credit Score

The following visas can get loans for students with no credit:

• F-1 – International Students
• OPT – Optional Practical Training
• O-1 – Extraordinary Ability
• L-1 Intracompany Transfer
• TN – NAFTA Professionals
• J-1 Cultural Exchange
• DACA – Childhood Arrivals

2. Receive an Offer

After all the boxes have been ticked, Stilt will send you an offer and a promissory note to sign. As soon as you’ve signed, the money will be disbursed. It may take 2-3 business days for the money to reflect in your account.

3. Start Repaying

This is the last step but very crucial. Repay your loan. It shouldn’t take long to set up the autopay options online which will automatically deduct the required amount from your bank account each month. You can also make early payments to pay off your loan sooner with no prepayment penalties.

5 Ways to Build Your Credit Quickly

One of the options for international students with no credit is to build their credit. Building your own credit score can be tough. Here are few ways to build it relatively quickly.

1. Reduce Your Debt

Lower the amounts of debt you already have. There are two indicators that lenders look at. The first is called the debt-to-equity ratio. The second is called the debt-to-income ratio. These measure the amount of debt in relation to your equity and income. The lower the ratio (i.e. the debt in relation to your income for example) the better. Both of these indicators are, therefore, strengthened as you lower your debt. This will increase your credit score.

2. Apply for a Credit Card

If you don’t have a credit score, you’ll have to apply for a secured credit card.

Secured credit cards work like a normal credit card, but it requires a deposit upfront. The deposit essentially serves as your card limit and as security should you not repay your loan. This means it is safe for a lender to borrower you the money whilst you have the opportunity to prove you are a trustworthy borrower. A secured credit card gives you the chance to prove you will make your monthly repayments on time. So this is a safe way you can build your credit.

3. Have Your Rent Payments Reported

There is a service called rent-reporting. Service providers take a bill you are already paying and report it on your credit history. This is a way to show you are a trustworthy payer. Not all lenders take these types of payments into consideration, but it may help you to get the credit you need.

4. Become an Authorized User

You can also become an authorized user on someone else credit card. You’ll have your name linked to a credit card and all of the owner’s on-time repayments will reflect positively on your credit score. You’ll have to find someone who trusts you though, as you’ll have access to spend their credit balance.

5. Take a Credit Build Loan

With a credit builder loan, you apply for a loan and repay it according to the terms. But, the loan is not paid out to you until you’ve paid the full amount upfront. So essentially you are paying first then getting the money (which you paid) back later. This helps to prove your trustworthiness in repayments. Banks will offer this gladly because they have no risk to supply you with this service. Credit unions and community banks typically offer these types of loans.

Conclusion

You’re equipped with the knowledge to succeed. Now put it to good use to get the loan you need. You don’t have to be the victim of a lacking credit history. With lenders like Stilt out there, you’re sure to get the student loan for no credit you need!

Edmunod Daco

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