If you have a student loan, you may wonder if your credit score is good enough to refinance. At the same time, you must also be aware of how to refinance student loans with bad credit.
There are many ways to refinance a student loan, but only some will work for everyone. If your credit score isn’t high enough for one method, various other options can help you lower the interest rate on your loans and help you save money over time.
The difference between good credit and fair credit
If your credit score is between 600 and 720, you’re in the acceptable range of credit scores. A good score is 700 or above, but a fair score is still considered good enough to qualify for most loans.
Eligibility to refinance a student loan
In general, the eligibility to refinance your student loan is determined by your credit score. Here are some of the cases that might help you understand how much you should be making to qualify for refinancing a student loan:
- You have a high income and a good credit score. If this is the case with you, then you can refinance without any problem. The interest rates are low and will save you money over time.
- You have a medium income and fair credit score – Which means that there is room for improvement regarding your finances but not too much for them to prevent you from being eligible for refinancing if needed at some point in time later on down the road.
- On average, one-third of Americans currently hold debt from their educations, while many graduates leave school with hundreds of dollars worth of debt hanging around their necks.
Others may find themselves unable to pay bills immediately due to a lack of experience/skills necessary for jobs.
As per Lantern by SoFi professionals, “Every refinancing provider sets its own criteria, and some will accept a lower credit score than others.”
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What can be done if you don’t meet financial requirements?
You still have other options if you don’t meet these requirements for refinancing your student loan with LendingClub. You can:
Refinance with a private lender. If you have poor credit or no credit history, getting approved for an FHA loan may be challenging, but plenty of other options are available.
A private lender will evaluate your entire financial situation and determine how much they think they can lend based on the value of your home and other assets and any regular income streams.
These loans can come with higher interest rates than government-backed ones but also give borrowers more flexibility regarding repayment terms.
Other strategies for refinancing your student loan irrespective of your credit score
If your score is low, several strategies for refinancing your student loan, no matter your credit score. Here are some options:
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- Check Your Credit Score
- Talk to a Credit Counselor
- Get a Cosigner
- Consider a Private Loan
- Consider a Home Equity Loan (for those with high income)
Remember that your credit score is only one factor in whether or not you can refinance your student loan. Some other things also affect eligibility for refinancings, such as income and debt-to-income ratio. For example, reviewing all of these factors before applying for a new loan is crucial if you’re looking to refinance your student loan.
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