Simple answer, yes, you can get a student loan with bad credit. This is because student loans work differently from personal loans, as they don’t take into account your credit history.
Whether it’s to pay for tuition fees, maintenance costs or you just need extra money to pay for food or bills for the month, there are ways to get a student loan even if you have bad credit. We’ll cover all you need to know about student loans, overdrafts, credit cards and more.
Student Finance Loans
In the UK, your first consideration when borrowing money for university should be to look at getting student finance. This includes the Tuition Fee Loan and the Maintenance Loan, here’s a quick summary of these:
- Tuition Fee Loan: Your university or college sets your tuition fee and the loan is paid directly to them each year.
- Maintenance Loan: This is to cover your living quarterly during the academic year. How much you get depends on your household income and where you live. The loan is paid into your bank account at the start of each term.
Both of these student loans you have to pay it back, but only when your income is over the threshold amount for your repayment plan. For more information, read about when you start repaying your student loan. These loans don’t depend on your credit score, so you can get these student loans even with bad credit. As they’re backed by the Student Loans Company, they provide loans which depend on the academic year, course studied, your age, nationality, as well as your financial circumstaces.
For more information or if want to know how to apply, check out the official UK Government’s website on Student Finance.
Can Students Get Personal Loans?
Whether you’re looking to get a student loan on top of your student finance or instead of, it is possible for students to apply for personal loans in the UK. However, the options tend to be limited, especially if you have no credit history or are looking for a personal loan with bad credit.
Usually, students may be considered to be high-risk borrowers due to their lack of credit history or if they’re unemployed. This is why it’s easier to get student finance through the UK Government, as they are made for students. But if you’re in need of funds, there are ways.
You can get loans as a student with no credit or a poor credit score, just make sure you shop around to get the best deal. You might find higher interest rates due to bad credit, but there are bad credit loans out there and lenders who understand each financial situation is unique.
Related: Types Of Loans
Pros & Cons Of Personal Loans For Students
| Pros | Cons |
| Personal loans can be used for any purpose where student finance is typically restricted to education | Higher interest rates compared to government student finance, especially if you have bad credit |
| Loans can often be obtained without a co-signer, depending on the lender | Personal loans often come with shorter repayment periods, which mean higher monthly bills |
| If approved, you can have the funds in your account often the same day | Unlike maintenance loans, there are no deferment options, repayments starts immediately |
| If you’re responsibly managing your loan and paying it back on time, it could help build your credit score | If you struggle to make payments, it could damage your credit score and make it harder to borrow in the future |
| Variety of lenders means you can shop around for the best terms and interest rates for what you need | Taking a personal loan may lead to financial strain and a debt trap where you borrow more than you can afford |
How To Get A Loan As A Student With Bad Credit
If you’re sure a loan is right for you, getting a personal loan with bad credit is simple. When you apply online for a loan, you can select the amount you’d like and a repayment period, and you will receive a soft credit check which doesn’t harm your score to show you how eligible you may be. If you continue with your application and get approved, your funds will be in your account as fast as the same day. Just know that once you get your loan, the repayments will be every month until you pay off the full amount.
If you’re unable to get a student personal loan with bad credit, you can always try to increase your chances by improving your credit score. This will also help to lower interest rates on loans you get approved for.
Student Loan Alternatives
While you can receive financial aid from the government while studying, you might still need extra help. Some lenders offer bad credit loans for students, but this might not be the best option, especially if you have bad credit. Other ways of borrowing as a student include:
- Student Overdrafts: Most bank accounts offer an interest-free arranged overdraft which allows you to go into the negative on your balance as long as you repay the money by a fixed date. It’s important to talk to your bank about your options for this, as it varies.
- Student Credit Cards: Some banks offer student credit cards which allow you to borrow money while simultaneously building your credit score up by managing repayments.
Related: Credit Cards For Bad Credit
To make sure you are improving your credit score and not harming it, you should aim to pay off what you owe by the fixed dates each month. This will not only build credit, but you can avoid paying interest. If you miss payments, you could damage your credit score further, incur late fees, and even damage your chances of borrowing in the future.
Does A Student Overdraft Affect Your Credit Score?
No, as long as you are paying off the fees each month, it won’t affect your credit score. However, if you use more of your overdraft than intended, you may incur extra fees or late fees if you don’t pay it off in time. This can damage your credit score.
Some banks allow you to only go into your overdraft by so much or want it paid off by a specific date. Talk to your bank to find out what they offer, as longs as you follow what they set, your student overdraft won’t affect your credit score.
Read more: How To Get An Overdraft
Financial Help Available To Students
Managing your money as a student isn’t something you need to do alone. If you’re worried about paying for living costs or university outside of your student finance, there is help available:
- Scholarships And Bursaries: This a sum of money that doesn’t have to be repaid and can help cover the costs of student life. Check with your university administrative team on specific information, scholarships usually depend on academic and student performance, whereas bursaries depend on your background and circumstances.
- Hardship Funds: Previously called Access to Learning Funds, this is a non-repayable grant that universities may offer these to students struggling financially. Talk to your university for more information on how to apply.
- University Emergency Loans: Some universities will offer interest-free, short term student loans which usually don’t take into account your credit score. Ask your university for more information and whether they offer these.
- Consider A Part-Time Job: Working while studying can help you earn extra money each month and can help you pay for student living. Some universities even offer student jobs on campus, such as working at the library. Just make sure that you aren’t working too many hours to balance a healthy work/study life.
- Family Or Friends: Only consider this option if you have trusted family or friends that you know can help you if need be. It’s important to make sure that you repay them as well within a timely manner to avoid any misunderstandings or break their trust.
- Debt Charities: These can give free advice if you’re struggling, as well as help you assess your financial situation to decide the best choice for you. A few of these include StepChange, National Debtline and Citizens Advice.
Managing Student Life & Budgeting
Managing finances as a student can be difficult, but there are ways that you can help spread your money further. While coursework or university fees might be out of your control, creating a budget to track your income and expenses can help you limit what you spend on certain things. Prioritise your needs over wants when buying things, take advantage of student discounts and deals where possible, and finally save on food costs by eating in more and packing lunch.
For more tips to be money-savvy and budget ideas, check out our Good Vibes blog.
