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A non-purpose loan is an alternative type of loan that allows individuals to use investment securities they own as collateral to borrow money. With a non-purpose loan, borrowers can get access to the funds they need and continue to earn potential returns on their investments. However, non-purpose loans come with some financial risks to be aware of.

Read on to learn how non-purpose loans work and their benefits and drawbacks.

What Is a Non-Purpose Loan?

A non-purpose loan — also known as a securities-backed line of credit (SBLOC) — is a type of secured loan offered by some financial institutions and brokerage firms. Instead of using collateral such as a home or car to back the loan, a borrower uses securities in their investment portfolio.

Interest rates on non-purpose loans tend to be variable, and they may be slightly higher than the rates on personal loans. (A personal loan calculator can help you determine the personal loan rate you might qualify for.) The borrower must make interest-only monthly payments on a non-purpose loan until you decide to pay it off. The loan’s principal can be repaid in increments or all at once.

The Way a Non-Purpose Loan Works

With a non-purpose loan, you borrow money using your investments to back the loan, and you continue to earn any interest, dividends, and capital appreciation on those investments.

The amount you can borrow with a non-purpose loan varies, although you can typically borrow between 50% to 95% of your portfolio. The exact percentage depends on two main factors: the types of assets in your accounts and the value of your portfolio. Lender requirements may also be a determining factor. To qualify for a non-purpose loan, a lender may require you to have assets with a market value of at least $100,000.

Unlike traditional lending products such as personal loans, non-purpose loans are subject to maintenance calls. That means if the value of your investment accounts falls below a certain level, the brokerage or financial institution will ask you to boost the equity in your investments to meet the margin requirements.

In the case of a maintenance call, you’ll need to increase your accounts’ value by either depositing more money in them or partially repaying the loan.

Non-Purpose Loan vs Margin Loan

A margin loan is another type of lending product that’s backed by a borrower’s investment securities. Like a non-purpose loan, a margin loan allows you to borrow against the investments in your portfolio while continuing to earn any dividends and interest. Margin loans are subject to maintenance calls just as non-purpose loans are.

However, there are differences between the two. A margin loan is typically used for the sole purpose of purchasing more securities. A non-purpose loan, on the other hand, can be used for virtually anything other than purchasing securities. To obtain a margin loan you can only use the investments in one account as collateral, whereas you can get a non-purpose loan by using investments in several accounts.

Pros and Cons of a Non-Purpose Loan

Non-purpose loans have distinct benefits and drawbacks. For example, these loans are flexible and can be used for many purposes, but they often require borrowers to have investment accounts with a high value.

This chart gives an at-a-glance comparison of the advantages and disadvantages of non-purpose loans.

Pros of a Non-Purpose Loan

Non-purpose loans have several features that can make them attractive to borrowers.

May not require a credit check. Unlike traditional loans such as unsecured personal loans, a non-purpose loan might not involve a credit check. Instead, the lender may base the amount of the loan on the value of your portfolio.

Allows investment returns. Borrowers don’t have to sell their securities to obtain a non-purpose loan. They can continue to get possible returns on investments.

May avoid capital gains tax. Because you don’t have to sell securities to get a non-purpose loan, you won’t have to pay capital gains tax.

Provides flexibility. With a non-purpose loan, you can use the proceeds in almost any way you wish. For instance, you can use the money to pay off medical expenses, tide you over during a job loss, or for home improvement funds.

Recommended: Using a Personal Loan for Taxes

Cons of a Non-Purpose Loan

Along with possible benefits, there are some significant drawbacks of non-purpose loans to consider.

High asset value requirements. To qualify for a non-purpose loan, a lender typically requires you to have assets with a high minimum value of at least $100,000.

Variable interest rates. Non-purpose loans generally have variable interest rates, which means the rates can go up and down throughout the life of the loan. You may want to check personal loan rates to compare the interest rates of other lending options.

Subject to maintenance calls. The investments that serve as your collateral for a non-purpose loan are prone to market volatility, so you could be impacted financially. For instance, should the value of your securities go down, the value of your portfolio may no longer meet the collateral requirements for the loan, prompting a maintenance call. In that case, you might have to deposit money in your accounts or partially repay the loan.

Loan funds cannot be used for investing. Unlike margin loans, you can’t use the money from a non-purpose loan to purchase investment securities.

Recommended: How to Pay Tax on Personal Loans

The Takeaway

A non-purpose loan may be attractive to certain borrowers because it gives them the ability to use their investment securities as collateral while continuing to earn money on their investments. However, these loans tend to have high minimum balance requirements and variable interest rates, and they’re subject to maintenance calls, which could be financially challenging. Consider the potential pros and cons of a non-purpose loan to make sure it’s a good option for you.

You can also look into other lending products. While SoFi doesn’t offer non-purpose loans, we do offer personal loans with amounts ranging from $5,000 all the way up to large personal loans of $100,000. You can explore the different types of loans available, and shop around for the best rates, to decide which option is right fit for your borrowing needs.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is the meaning of a non-purpose loan?

A non-purpose loan is an unconventional loan that allows you to use securities from different investment accounts as collateral for the loan. For some borrowers, the main advantage to this type of loan is that their investments stay intact, and they can potentially earn money from interest and dividends.

However, there are disadvantages to non-purpose loans. For instance, if the value of your investments drop, you may be required to add money to your accounts or repay part of the loan.

What is the difference between a purpose and a non-purpose loan?

A purpose loan uses investment securities as collateral and is typically used to buy more securities. A non-purpose loan is also backed by investment securities, but it can be used for almost any purpose, except for purchasing securities.

Is a non-purpose loan better than a purpose loan?

Non-purpose loans and purpose loans have different uses and requirements, and one isn’t necessarily better than the other. It mainly depends on what you’re using the loan for. A purpose loan is generally used for one specific purpose, typically to purchase securities. A non-purpose loan can be used for almost anything except purchasing securities. Only you can decide which type of loan is best for your intended use of the funds.

Photo credit: iStock/RgStudio

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q324-013

Becoming a teacher requires a bachelor’s degree and passing certification exams. Depending on the type of school setting, location, and subject area, educators may also need to earn a graduate certificate or degree. Fortunately, there are many teacher scholarships that can help make pursuing a career as an educator more affordable.

Below are 25 scholarships for aspiring teachers that can help cover the cost of undergraduate and graduate degree programs in education.

1. TEACH Grant

The U.S. Department of Education provides Teacher Education Assistance for College and Higher Education (TEACH) Grants of up to $4,000 per year for undergraduate and graduate students pursuing a career as a teacher. Applicants must be eligible for federal student aid programs, be enrolled at a participating school, and meet academic requirements.

Recipients must fulfill a service obligation to teach a highly needed subject in a low-income area or where there’s a teacher shortage, or else have their TEACH Grants converted to a Direct Unsubsidized Loan.

Recommended: How College Financial Aid Works

2. STEM Teachers for America’s Future Graduate Scholarships

The AFCEA Educational Foundation offers scholarships of $2,500 to graduate students pursuing a degree or credential to teach science, technology, engineering, or math (STEM) subjects to grades K-12 in the U.S. Applicants must have a GPA of 3.5 or higher and complete a B.S. degree in a STEM field.

3. James Madison Graduate Fellowship

The James Madison Memorial Fellowship Foundation provides around 50 awards of $12,000 per year for college seniors and college graduates who intend to become secondary school teachers of U.S. history, government, or civics. Recipients are expected to complete graduate programs within two academic years and teach for a duration equivalent to the fellowship funding received.

Recommended: 10 Most Common Types of Scholarships

4. Glenn Moon Scholarship

The Association of Retired Teachers of Connecticut offers the Glenn Moon Scholarship, consisting of multiple scholarships of $2,000 per year for students pursuing a teaching degree. Applicants must be residents of Connecticut to be eligible.

5. SoFi Scholarship Giveaway

In addition to teacher scholarships, registering for SoFi’s $2,500 scholarship sweepstakes is another opportunity to get free money for college. Scholarships are awarded on a monthly basis, and registration takes just a couple steps.

6. Barbara Lotze Scholarship for Future Physics Teachers

The American Association of Physics Teachers issues approximately five scholarships of up to $3,000 for U.S. citizens pursuing a degree leading toward a career as a high school physics teacher. High school seniors and current college students are eligible to apply for funding for each year of their degree program.

7. Nancy Larson Foundation College Scholarship

The Nancy Larson Foundation awards a minimum of five $1,500 scholarships to students preparing to become elementary school teachers. Juniors, seniors, and graduate students who have declared an elementary education major are eligible to apply for the Nancy Larson Foundation College Scholarship.

8. TeachDFW Scholarship

The TeachDFW Scholarship awards up to $1,000 to any future educator applying to a teaching program. The scholarship is aimed at addressing the teacher shortage and improving education quality in local Dallas-Fort Worth schools by empowering aspiring teachers.

9. South Carolina Teaching Fellows Program

The SC Teaching Fellows Program provides professional development opportunities and funding for up to 200 high school seniors who have demonstrated community service experience, high academic achievement, and a desire to become a teacher in South Carolina. Fellows can receive up to $24,000 in funds, or up to $6,000 a year for four years, while earning a degree that leads to initial teacher certification.

Recommended: Explaining Student Loan Forgiveness for Teachers

10. National FFA Alumni and Supporters Agricultural Education Scholarship

The National Future Farmers of America (FFA) Organization offers $1,000 scholarships to students pursuing a degree leading to a career as an agriculture teacher. Applicants must be high school senior FFA members or FFA alumni enrolled in a two- or four-year degree program.

11. Joseph T. Weingold Scholarship

The Arc New York Joseph T. Weingold Scholarship awards four New York Arc Chapter employees $3,000 scholarships per year for those enrolled in a New York State degree program, leading to a special education certification.

12. International Teacher Education Scholarship

The Alpha Delta Kappa Foundation grants up to seven awards of $10,000 annually to women from outside the U.S. pursuing a graduate degree in a field of education in the U.S. To be eligible, applicants must have a bachelor’s degree and reside outside the U.S. prior to enrolling in graduate school.

Recommended: 10 Popular Scholarships for Women

13. Next Generation Hoosier Educators Scholarship

The Next Generation Hoosier Educators Scholarship provides awards of up to $10,000 each year for Indiana residents pursuing a career in education. Recipients may renew the scholarship for four academic years. Additionally, recipients agree to teach for five years at an eligible school in Indiana or repay the prorated amount of the scholarship award.

14. High School Senior Scholarship for Future Teachers

The Georgia Association of Educators provides up to 10 awards of $1,000 for high school seniors in Georgia who will attend an accredited college or university and plan to major in education. Applicants must submit two letters of recommendation and complete a 500-word essay on “Identify the Teacher Who Inspired You to Consider Becoming a Teacher and Why?”

15. College Junior/Senior Scholarship for Future Teachers

The Georgia Association of Educators provides awards of $1,000 for rising college juniors and seniors enrolled in an accredited education program at a Georgia college or university. Applicants must submit two letters of recommendation and complete a 500-word essay on “Why Do You Choose to Become a Teacher and What Do You Hope to Accomplish in this Profession?”

16. Underwood-Smith Teaching Scholars Program

The Underwood-Smith Teaching Scholars Program provides 25 awards of $10,000 per year to students enrolled at a West Virginia college or university and pursuing a degree in math, science, elementary education, or special education. Recipients may receive funding for up to four years, and are required to teach in a West Virginia public school for at least five years after graduation.

17. Martin Luther King, Jr. Memorial Scholarship Program

The California Teachers Association (CTA) provides multiple teacher scholarships of up to $6,000 for California residents pursuing a degree, credential, or certification for a teaching-related career. Applicants must be a member of a defined BIPOC group and either an active member of CTA or CTA Aspiring Educators, or a dependent child of a CTA member.

18. Dakota Corps Scholarship

The Dakota Corps Scholarship provides full-tuition scholarships to South Dakota students who commit to working in critical-need fields within the state, such as teaching, nursing, or engineering, after graduation. It’s awarded based on academic performance and a willingness to serve in high-demand professions in South Dakota’s rural or underserved areas.

19. Al Mance Memorial Scholarship

The Tennessee Education Association provides an Al Mance Memorial Scholarship (in addition to other scholarships) of $1,000 to a male undergraduate or graduate student of color who is enrolled in an education degree program at a Tennessee college or university.

20. Winifred R. Reynolds Educational Scholarship

The Denver Foundation provides awards of $1,000 to $7,000 for Colorado residents enrolled or planning to enroll in a master’s or doctorate level program in early childhood education, child development, or educational psychology. Applicants must demonstrate financial need and a cumulative GPA of 3.5 or higher.

Recommended: How Much Does GPA Matter When Applying to College?

21. Clara Onishi Educator Scholarship

The Clara Onishi Educator Scholarship, part of the Odo Scholarship Foundation, awards one scholarship of $1,250 each year for students enrolled in an accredited teacher education program. Recipients must be a Hawaiian resident and show intent to teach in Hawaii.

22. Minority Teachers of Illinois (MTI) Scholarship Program

The Illinois Student Assistance Commission provides scholarships of up to $7,500 each year for minority students who are enrolled at an Illinois undergraduate or graduate program that qualifies recipients to be licensed teachers upon completion. Recipients must be in-state residents and committed to teaching in Illinois after graduation.

23. Victoria Soto Memorial Scholarship

This four-year renewable scholarship of up to $12,000 is awarded by the Vicki Soto Memorial Fund to four recipients per year: two graduates of Stratford High School, one Connecticut recipient, and one national recipient. Applicants must be pursuing a college degree in education at an accredited school.

24. Teacher Education Scholarship

The Oregon PTA Teacher Education Scholarship offers scholarships of $1,000 for in-state residents studying at an Oregon public college or university to become elementary or secondary school teachers. The scholarship is a one-time award and available to graduating high school seniors or current college students.

25. First-Year Teacher Scholarships

The Texas Retired Teachers Foundation First-Year Teacher Scholarship provides numerous awards of $1,000 to recent college graduates entering their first year of teaching in Texas. Funds may be used to reimburse applicants for the costs of teaching certifications and classroom materials.

Recommended: How Much Does a Teacher Make a Year?

The Takeaway

Applying for multiple teacher scholarships can be a useful strategy to help pay for the cost of college, graduate school, and becoming an educator. The application processes can vary, so it may be helpful to explore and research scholarships that best fit your personal situation and educational and career goals.

It’s not uncommon for students to use multiple funding sources, including grants, scholarships, federal student loans, and private student loans to help cover the cost of college.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What types of scholarships are available for aspiring teachers?

Scholarships for aspiring teachers include merit-based awards, financial need scholarships, and those focused on specific teaching areas such as STEM, special education, or early childhood education. Some scholarships are also offered for teachers pursuing advanced degrees or certifications in specific subjects.

How do I apply for a scholarship for teachers?

To apply for a teaching scholarship, you typically need to complete an online application, submit transcripts, write an essay, and provide letters of recommendation. Some scholarships may also require proof of enrollment in a teaching program or a commitment to work in underserved schools.

Are there scholarships for current teachers pursuing professional development?

Yes, many scholarships are available for current teachers looking to further their education, pursue advanced degrees, or earn additional certifications. These scholarships often focus on supporting teachers who want to specialize in areas like leadership, technology, or special education to enhance their professional skills.

Photo credit: iStock/Choreograph

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q324-086

When you take out private student loans, your lender works with your school to certify the loan before disbursing funds. But what happens when a school won’t certify private loans for college?

If private student loan certification isn’t granted, there are steps students can take to address the issue.

Here’s an overview of how private student loan certification works, potential reasons for having certification denied, and some options to remedy the situation.

Understanding Private Student Loan Certification

Private student loan certification is often a required step for funds to be disbursed by a lender to your school. This is intended to protect student borrowers by ensuring that they’re informed about their federal financial aid options and the school’s cost of attendance when taking out private student loans.

With school-certified private student loans, borrowers fill out and sign a Private Education Loan Applicant Self-Certification form after receiving loan approval. This form provides lenders with a student’s enrollment information and any financial assistance they’ve received, such as grants or scholarships.

Next, lenders send the private student loan information to the school for certification. Schools are responsible for confirming that students are enrolled and that the loan amount does not exceed the cost of attendance: tuition, fees, books, living expenses, transportation costs, and dependent care (if needed). If this information checks out, the certification moves forward and the loan funds will be disbursed without any further action required by students.

While waiting, you might be wondering “how long do private student loans take to process?” It can take anywhere from two to 10 weeks for a student loan to process, depending in part on any issues in the student loan certification process.

When the student loan certification is complete, borrowers receive a final loan disclosure from their lender. This indicates the loan amount, which could be adjusted by the school if the requested funds exceed the total cost of attendance. Borrowers are then offered a three-day waiting period after receiving the final disclosure, known as the right-to-cancel period, to cancel the loan with no penalty.

Do private loans go directly to the school or student? With school-certified loans, the lender disburses loan funds directly to the school.

Recommended: Student Loan Basics

The Role of Schools

After issuing loan approval, a lender forwards a certification request to your school’s office of financial aid. This involves verifying certain information provided when applying for the loan, including enrollment status, expected graduation date, year in the program, and requested loan amount.

Federal regulation prohibits students from receiving student aid that exceeds the cost of attendance. To determine the maximum amount of loan funds, the school financial aid office deducts all other types of financial aid — scholarships, grants, and federal student aid — from the school’s cost of attendance for that semester or academic year.

A key difference with private student loans compared to federal loans is that schools do not consider the Student Aid Index (SAI) when calculating how much can be borrowed in private student loans. Additionally, maintaining satisfactory academic progress could be required by schools to certify private student loans.

With all this information, schools will either certify, certify with changes, or deny certification. For instance, loans could be certified for a lesser amount than what was initially requested if it surpasses the school’s cost of attendance.

Recommended: Undergraduate Private Student Loan Rates

Reasons for Certification Denial

There are a few possible reasons why a school won’t certify private loans. Resolving any such issues — whether on behalf of the student or school — is necessary for the disbursement of student loan funds to move forward.

Common Scenarios for Student Loan Certification Refusal

Here’s a look at some common scenarios where schools might refuse private student loan certification.

Exceeding Cost of Attendance

As mentioned above, schools are prohibited from certifying a loan amount that’s greater than the cost of attendance, minus any financial aid awarded.

Note that schools may list different dollar amounts for the cost of attendance depending on a variety of factors. For instance, students living on campus may have a different cost of attendance than those living off campus. Whether you’re paying in-state vs. out-of-state tuition and attending undergraduate vs. graduate school can also impact how your school calculates your cost of attendance.

Schools may break out the cost of attendance into separate expenses. This means that student loan certification could be denied for specific expense categories (e.g., housing costs) if they’re higher than what’s allowed by the school.

Satisfactory Academic Progress Issues

Students are required to maintain Satisfactory Academic Progress (SAP) at their school to continue receiving financial aid. Each school sets its own SAP policy, but generally students need to maintain a 2.0 GPA to maintain eligibility.

While private student loans typically don’t have SAP requirements, losing financial aid could impact your ability to pay for college.

Recommended: Comparing Private Student Loans

Enrollment Status Discrepancies

It’s not uncommon for students to adjust their course load, but a change in enrollment or incorrect reporting of enrollment status could lead to certification denial.

Student loan certification often occurs in the weeks preceding the start of the semester, so it’s important to ensure you’ve successfully enrolled before then. Additionally, a discrepancy could occur if dropping or adding classes impacts enrollment as a full-time vs. part-time student.

Steps to Take When Loan Certification Is Denied

If private student loan certification is denied by your school, there are a few options to consider to avoid delayed or halted disbursement.

Recommended: How Are Private Student Loans Disbursed?

Request an Explanation from the School

Your school’s financial aid office is usually the point of contact to understand the rationale for certification denial and the necessary steps to resolve the problem. Errors with enrollment status or personal information can usually be addressed quickly, but it’s important to reach out promptly.

Appeal the Decision

If the denial involves exceeding the cost of attendance, students may need to appeal the decision with their school. Often referred to as a professional judgment, this appeal aims to increase the student’s cost of attendance to be eligible for additional student loan funding.

Financial aid offices typically consider professional judgment on a case-by-case basis, so it’s important to have documentation to support the request for revising the cost of attendance. For example, a student living off-campus could provide their renewed lease to show an increase in rent. Other circumstances that could warrant a professional judgment include childcare, disability-related expenses, and medical costs.

Explore Alternative Funding Sources

Students often use multiple funding sources to pay for college.

Applying for college scholarships and grants could secure financial aid to help cover tuition, room and board, and other school expenses. This type of aid is usually awarded based on academic merit or financial need, and doesn’t need to be paid back.

To apply for most scholarships and grants, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). After completing the FAFSA, students receive a financial aid package from the schools they’ve been accepted at, outlining eligible financial assistance, including federal student loans, work-study, grants, and scholarships.

Managing Private Student Loan Debt Responsibly

Staying on top of private student loan debt is essential for long-term financial health. Understanding your loan terms, including the interest rate and repayment plan, is key to developing a payback strategy that avoids fees and penalties.

After graduation, students may have a grace period before they need to start repaying their private student loans. Once repayment begins, setting up automatic payments could provide a discount on the loan interest rate and help ensure you’re sticking to your debt payoff goals.

Recommended: Private Student Loan Forgiveness

The Takeaway

Private student loan certification is a required step for funds to be disbursed to your school. If your school doesn’t certify your private student loans, don’t panic. Reach out to your school’s financial aid office to determine if any errors have been made, then take the necessary steps to resolve it.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Can schools deny private student loan certification for any reason?

No. Schools deny private student loan certification if the amount exceeds the cost of attendance or if there are discrepancies in a student’s enrollment status.

What happens if a private student loan is disbursed without certification?

Private student loans cannot be disbursed until a school completes the certification process. In rare circumstances, students may be eligible for a false certification discharge if a loan was disbursed despite a student being ineligible to receive a loan.

Are there limits on the amount schools can certify for private student loans?

Yes, schools cannot certify private student loans exceeding the cost of attendance, minus any financial aid. Note that students can request a professional judgment to increase their cost of attendance, but these are granted on a case-by-case basis.

Photo credit: iStock/recep-bg

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q324-030

Many landlords will only consider prospective tenants with decent credit scores. However, some private landlords who are eager to fill empty rentals quickly may advertise “no-credit-check” apartments. In other cases, smaller family-owned buildings just don’t have the same documentation requirements as bigger complexes handled by property managers or brokers. Even if the building you’re interested in does require a credit check, there may be ways to get around it.

If you have bad credit or no credit, we’ll explain all the ways you can still rent an apartment.

•  Renting with bad credit or no credit is possible through no-credit-check apartments, which are often managed by private landlords who prioritize consistent rent over credit checks.

•  Strategies include finding a cosigner, paying a higher security deposit, or providing proof of financial stability.

•  Subletting or sharing an apartment can bypass credit checks, as these arrangements often require less documentation.

•  Building credit history by becoming an authorized user on a credit card or paying bills on time could improve rental prospects.

•  Being honest about credit issues and providing references from previous landlords may help secure a rental agreement.

Are There No-Credit-Check Apartments?

A handful of landlords will rent an apartment without a credit check. However, apartment hunters should approach advertised “no-credit-check apartments” with caution. The term can sometimes be code for “these units are problematic,” or “this landlord is difficult,” or even “this is a scam.”

Sometimes, however, private landlords in smaller buildings just don’t see the need for credit checks. They don’t advertise this, but “for rent by owner” (or FRBO) listings can offer a clue.

Instead of pulling a credit report themselves, some landlords will accept a credit reference with the rental application. Credit reference documentation can be a recent credit report that the tenant provides (saving them from paying a fee), or pay stubs and W-2s, or letters from previous landlords or lenders — basically, anything that shows your ability to pay the rent.

Recommended: Trying to Rent in a Tight Housing Market? 4 Steps To Win the Lease

Why Landlords Perform Credit Checks

Landlords perform credit checks for apartment rentals for the same basic reason that employers run credit checks for employment: to help determine whether a prospect is financially responsible.

Landlords want tenants who pay their rent on time. By checking an applicant’s credit report, a landlord can see how reliably the person pays their bills and manages their credit. If someone has a history of late payments or outstanding debts, a landlord may think twice before renting to them.

When landlords run a credit check, it will be a soft credit inquiry, which won’t affect your credit score.

How the Process of No-Credit-Check Apartments Works

Depending on the landlord, the application process for a no-credit-check apartment can be pretty standard or very casual. Landlords generally ask for the following as part of your application:

•  Proof of identity

•  Proof of employment, income, or financial stability

•  Vehicle information, if parking is provided

•  Personal references

•  Application fee

Typically, it takes one to three business days to process an application. Afterward, you’ll be given a lease to sign. At this time, you can negotiate the security deposit, move-in date, and any details such as minor repairs to be made. When you receive the keys, the place is yours.

Where to Find No-Credit-Check Apartments

You can find no-credit-check listings in print, online, or via signs on some buildings. No-credit-check apartments are usually not handled by a hired property manager or broker. Instead, they are managed by a private landlord (the building owner) who needs to have rent continually coming in to cover the costs on their property.

Some of these landlords are less particular about their prospective tenants. Others trust their instincts about people over credit and background checks. And others still, as noted above, just don’t want to deal with the hassle and fees associated with credit checks.

Tips for Renting an Apartment With No Credit

If you’re looking to rent an apartment (or house) but you have no credit or bad credit, here are some tried-and-true strategies.

Recommended: Should I Sell My House Now or Wait?

Be Honest

No one likes an unhappy surprise. If you haven’t established credit yet, say so. If you have credit problems, say so. Have a conversation with the landlord before you apply to gauge their flexibility and warn them of red flags in your credit history. Then include a cover letter with your application repeating your explanations. Glowing reference letters also help offset a poor credit score.

Recommended: What Is a Tri-Merge Credit Report?

Get a Roommate

Finding a roommate with good credit can help make the deal go through. A landlord may accept using their name alone on the lease (assuming the roommate is OK with taking full responsibility for rental payments). Or you may be able to put both of your names on the lease.

Look for Sublets and Shares

Sometimes, a leaseholder will “sublet” their apartment while they pursue opportunities elsewhere. This allows them to return to their former home in the event they want to move back. Rather than paying rent to the landlord, the subletter will often pay the leaseholder, so financial documentation may not be required. This is a common arrangement in big cities, especially among leaseholders of rent-stabilized apartments.

In share situations, roommates who are on the lease may sublet an extra room without requiring much, if any, documentation. As long as you make a good impression, they may give you a chance.

Find a Cosigner

A cosigner is someone who promises the landlord to cover your rent if you cannot pay — usually a good friend or family member with great credit. Cosigners may or may not live in the apartment.

Pay a Higher Security Deposit

If you’re brainstorming how to rent an apartment with bad credit and no cosigner, consider laying some cash on the line. Whether you dip into savings or build up your reserves with an online budget planner, putting down several months’ rent as a security deposit can reassure the landlord.

Show Financial Proof

Perhaps you make a decent income that will make it easy to pay your rent. Or you saved up some money as a cushion. Share proof with the landlord in the form of pay stubs and bank statements.

Use Previous Landlords as References

If you’ve rented from other landlords and made those payments on time, bring a reference letter or two to prove it. Ideally, the reference should be on letterhead or at least look neat and professional. That might mean creating the letter yourself and having your previous landlord sign it.

Promote Yourself

Have superior presentation skills? You can use them to persuade your landlord what a great tenant you’ll make. Turn on the charm. Bring homemade baked goods. It works.

Build Your Credit History

If there’s somewhere you can stay for now — with a friend or family member — spend that time building your credit history. To build up poor credit, focus on paying bills on time and paying down credit card balances. During this time, it may help to sign up for free credit monitoring. What qualifies as credit monitoring varies by service, but look for one that offers alerts whenever your score changes.

When you have no credit, you can start to establish your history by becoming an authorized user on a credit card or putting a utility in your name. Just be aware that it may take six months or more for the system to generate your credit score. You may be able to check your credit score for free through your bank, credit card company, or credit counselor.

The credit score needed to rent an apartment varies by location and landlord. But according to FICO®, a credit score of at least 670 is usually enough to rent an apartment.

The Takeaway

If you haven’t yet established credit or have a problematic credit history, no-credit-check apartments are one option. However, there are many other ways to secure a rental, from finding a sublet or share situation to paying a higher security deposit. Beware of shady no-credit-check apartments: There’s no reason to settle for an unsafe or unhygienic environment just because of your credit score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What happens if you don’t have credit but want to rent an apartment?

Let the landlord know up front and ask what you need to do to rent the apartment. Their suggestions may include getting a roommate or cosigner with good credit, or putting down a larger security deposit. If you’ve rented in the past and made payments on time, ask your previous landlords for reference letters and build a case about why you’ll make a great tenant.

Can I rent an apartment with collections?

If you’re planning to rent a no-credit-check apartment, then the landlord won’t consider issues on your credit report. If your credit will be checked, talk to the landlord up front to see if renting with collections on your report is somehow possible.

What’s the minimum score to rent an apartment?

It’s up to the individual landlord. If a landlord requires a “good” credit score, FICO considers that to be in the range of 670-739.

I’m wondering how to pay rent with a credit card, no fee. What can I do?

If you’re renting right now, ask your landlord. If you’ll be seeking an apartment to rent, ask prospective landlords if this is possible. Each landlord has their own policy about credit cards.

Photo credit: iStock/StefaNikolic

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