Borrowers who want to refinance student loans will likely need good or excellent credit to qualify.
According to Experian, one of the three main credit bureaus, 670 is generally the base credit score that lenders require to be eligible for student loan refinancing.
On the FICO Score ranges, scores between 670 and 739 are considered 'good.' But some lenders' eligibility requirements allow applicants to have scores in the 'fair' range, between 580 to 669, to qualify. For example, private student loan lender Earnest says on its website that potential borrowers need to have a minimum credit score of 650.
No matter what the credit score thresholds may be, the higher your score, the better chance you have at getting a lower interest rate, which is one of the main reasons you should consider refinancing in the first place. Your credit score is the most important factor in determining your new student loan refinance rate, and a low interest rate not only lowers your monthly payments but will help you save money in the long run.
Beyond just your credit score, however, there are additional eligibility requirements you'll need to meet to be able to refinance your student loans. Here's what else to consider:
Eligibility requirements to refinance a student loan
On top of having good or excellent credit, interested borrowers looking to refinance their student loans will likely have to be able to also show the following:
- A history of on-time student loan payments gives lenders insight into your payment behavior on your current student loans and the likelihood you'll pay your new refinanced loan on time.
- Dependable, or consistent, income shows lenders that you have the money and ability to repay your new refinanced loan in full, well into the future
- A low debt-to-income (DTI) ratio reveals to lenders if you can afford your new monthly payments. Your DTI ratio shows how much debt you have relative to your income. A low DTI ratio indicates that you make more than you owe, whereas a high DTI means that more of your paycheck goes toward paying your debts. Lenders like to see a DTI ratio of 40% or less. Lower your DTI ratio by paying down your debt, like credit card balances, and/or increasing your income, such as asking for a raise.
To calculate your DTI ratio, divide your total monthly payments (credit card bills, rent or mortgage, car loan) by your gross monthly earnings (what you make each month before taxes and any other deductions). - Proof of graduation certifies that you have obtained your degree. Most lenders will only approve borrowers who have graduated and obtained a degree.
Keep in mind that some lenders are only available in certain states, most require borrowers to be a U.S. citizen or permanent resident and certain degrees and schools may require additional criteria from lenders in order to be eligible. Check with your lender for all the details before submitting an application.
What to do if you don't meet these requirements for refinancing
If you don't qualify for refinancing on your own, you can apply with a co-signer who meets the above requirements. This could be a parent, sibling or partner.
Just make sure that both you and your co-signer fully understand all the terms as there are some risks involved when you have someone else sign onto the refinanced loan. Both the primary borrower and their co-signer share responsibility of the loan, so if payments aren't made, the co-signer is held accountable for repayment. And, if the primary borrower misses a monthly payment, their co-signer's credit will also be affected.
Pay attention to refinancing lenders that offer co-signer releases. Many lenders allow co-signers to be removed from the loan after the primary borrower makes a certain number of consecutive on-time payments, which can serve as a bit of relief for the co-signer knowing that they aren't obligated to stay on for the entire life of the loan.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
If you have bad credit, you may be motivated to refinance your student loans to lower monthly payments. However, many lenders require a minimum credit score in the mid-to-high 600s. You will likely need a cosigner on the loan application to qualify.
What is the minimum credit score for a refinance? ›
For a conventional loan refinance, you'll usually need a credit score of 620. To refinance an FHA loan with Rocket Mortgage, you'll need a score of 580, and the same goes for VA loan refinances and VA IRRRLs.
Is it hard to get approved for student loan refinance? ›
Key takeaways. In order to refinance a student loan, lenders tend to require a strong credit score, a stable income, a degree and a decent debt-to-income ratio. Lenders require a minimum refinancing amount, which is the amount you still have to pay on the loan. This is so the lender can make enough interest.
What credit score do you need for a student loan? ›
Private student loans, including refinance loans, usually require a credit score of at least 670. However, knowing the precise requirements is tricky because private lenders are not always forthcoming with this information. Oftentimes the only way to find out if you qualify is to apply.
Why do I keep getting denied to refinance student loans? ›
There are a variety of factors that lenders consider in their decision to approve or deny a student loan refinance application. Most refinancing companies have credit score and debt-to-income (DTI) ratio requirements. Your salary and whether you've earned your degree can also impact your eligibility.
Can I refinance with a 580 credit score? ›
While you can still refinance with a lower score (with an FHA refinance, for instance, you need a minimum of 580), you will have fewer choices. Also, lenders will likely quote you a higher interest rate than if you had a better score.
How can I raise my credit score 100 points in 30 days? ›
How to raise your credit score quickly
- Lower your credit utilization rate.
- Ask for late payment forgiveness.
- Dispute inaccurate information on your credit reports.
- Add utility and phone payments to your credit report.
- Check and understand your credit score.
FHA rate and term refinance
As long as your new loan-to-value ratio is 90% or lower, you'll only need a 500 credit score to qualify for an FHA refinance. If it's higher than this, a 580 score is required.
Can I refinance with a 600 credit score? ›
Conventional refinance
To get approved, you'll need a credit score of at least 620. However, to qualify with the lowest credit score, you'll need an LTV of at least 75% and a debt-to-income ratio (DTI) of no more than 36%.
Why is it now a horrible time to refinance student loans? ›
Today's loan refinance rates are significantly higher, making it more difficult to find substantial enough savings through refinancing to justify the loss of the federal protections, including loan forbearance and the ability to access federal income-driven repayment plans.
When you shouldn't refinance student loans. You generally can't or shouldn't refinance if: You have federal loans and could see a drop in income. If there's a chance your income could decrease, don't refinance federal student loans.
What will you need in order to qualify to refinance a student loan? ›
Expert-Verified Answer. In order to qualify to refinance a student loan, you will need a good credit score and a good income-to-debt ratio i.e. Option 1 is correct.
What is the minimum credit score for a Sallie Mae student loan? ›
Sallie Mae doesn't disclose a minimum credit score, but indicates loan eligibility is subject to credit approval. Borrowers who don't qualify based on their own credit can apply with a cosigner, and Sallie Mae makes cosigner release available in as little as 12 months.
What is the minimum credit score for fafsa? ›
The fact that there is no credit check or minimum credit score required for most federal student loans is just one of the many perks of federal student loans. Federal student loans are a better option over private student loans because they offer the following: The potential for student loan forgiveness.
What is a good student loan refinance rate? ›
Summary: Best Student Loan Refinance Rates
| Company | Forbes Advisor Rating | Fixed APR |
|---|
| SoFi® | 4.5 | 4.99% to 9.99%* |
| Citizens Bank | 4.0 | 5.89% to 10.99% |
| Rhode Island Student Loan Authority | 3.5 | 6.34% to 8.99% |
| Education Loan Finance | 3.5 | 4.84% to 8.69% |
3 more rowsAug 30, 2024
There is no limit on how many times you can refinance your student loans.
What is Sallie Mae credit score requirement? ›
The average credit score for approved Sallie Mae borrowers is around 748 for undergraduate student loans. That's pretty high – but don't panic if your credit score is much lower than that. You'll need a minimum credit score (or have a cosigner with a minimum credit score) that is somewhere in the mid-600s.
