How to get credit with a bad credit loan for students

Getting a Student Loan with Bad Credit
Here's the scenario: You'll be heading off to college soon and you need a college loan. Problem is you either have no credit or you have "bad" credit. So, what can you do? First, you need to learn some student loan basics — "Student Loans 101," if you will.

Federal Student Loans
Think federal first. Federal loans are provided by the government and many of them don't require a credit check. Federal student aid can include Pell Grants, Federal Perkins Loans, Stafford Loans, and others. To apply, complete the FAFSA online, pay attention to deadlines, and talk to your school.
As good as federal loans are, chances are they will not cover all of your college costs. That's where private loans come in.

Private Student Loans
Private student loans are issued by banks, credit unions, and other lenders. Since they are credit-based, you'll need a respectable credit score to get approved or you'll need a creditworthy co-signer like a friend or family member.

What is a Credit Score?
In its basic terms, your credit score is a three-digit number from 300 to 850 that acts as a snapshot of your creditworthiness. It's also called your FICO, Beacon, or NextGen score, and the higher the better. Under 600, you're labeled a "high risk" and, if you're applying alone, that means a higher interest rate or a flat-out rejection when it comes to getting a school loan.

Is a Co-Signer a Viable Option?
The short answer here is YES. Having someone with great credit co-sign for you is a big deal. You'll not only increase the likelihood of getting a lower percentage rate (which can save you a significant amount of money), but with their signature on your college loan paper, you can begin establishing good credit for yourself — if you pay on time.

Choosing a Co-Signer
There's more to choosing a co-signer than just looking at their credit score. You will have to convince this responsible person to choose to co-sign for you. That's a big deal because your student loan will appear on their credit report, which may affect their ability to get a loan for themselves in the future.
Your co-signer will need to have total faith and trust in your ability to pay on time, month after month, year after year. If you're late or miss a payment, you're not the only one who'll get a collection call from your lender; your co-signer will get one too. If you don't pay, your co-signer is not only responsible but it will be reflected on their credit report as well.

Upping Your Number
If you have no credit, it's time to get some. Start building your credit history with one credit card, then use it wisely. More importantly, pay on time. In fact, paying on time counts for 35% of your credit score.1 Here are other factors to consider:

Debt-to-Credit Limit Ratio
Just because you have a high credit limit doesn't mean you should utilize it. Your debt-to-income ratio accounts for 30% of your score.1 This means you need to live within your means.

Keep Accounts Open
How long you've had your accounts and whether they're still open is 15% of your score.2 Even if you get mad at a creditor (perhaps they wouldn't increase your credit limit), don't close the account. Pay it off and leave it open.
Building credit takes time, improving credit takes even longer. Now, go forth and put your financial knowledge to good use.