Paying off student loans can always be a problem, but COVID-19 has made the process difficult for many borrowers.
IN The Biden administration has taken steps to help borrowers of student loans during this time, including the suspension of payments and interest on federal student loans. And this is also taking into account others student loan reformssuch as debt forgiveness. However, these efforts do not target borrowers with private student loans…
Those with educational debt to private lenders were largely left to manage their loans on their own, often with fewer opportunities to obtain reprieve or patience compared to what is available with federal student aid. As well as private student loans most likely will not be eligible for future forgiveness…
The good news is that if you have private loans, refinancing your student loan can help you lower interest rates and make payments more manageable. Refinancing rates have never been lower so now may be the optimal time to get a new loan to pay off old ones.
You can use the online student loan refinancing calculator to find out what your monthly payments would be if you refinanced your private loans and you can also get an idea of how much you will save.
However, you must meet certain requirements for your credit rating and other credentials that need to be approved to refinance a student loan.
Minimum Credit Rating for Refinancing a Student Loan
Refinancing student loans means getting a new loan that you can use to pay off your old one. Although this is not the best move if you have federal loans, it can be an excellent choice for private student loans. However, lenders want to make sure you qualify before getting a new loan. This means that they will check your credit.
If you are interested in refinancing a student loan, you will generally need a minimum credit rating of 670 or higher, according to Experian, one of the three major credit agencies. While some lenders may have more flexible eligibility requirements than others, you will have the widest selection of lenders and the best chance of getting a refinancing loan with that score.
If you want to look for lenders and find out if you are eligible for refinancing and at what rate you will be charged, Credible can help you. You can visit the Credible website for student loan refinancing rates. without affecting your credit rating.
Other factors lenders consider besides your credit history
While your credit is a key factor, lenders take into account other financial data as well. This includes:
- Your income: Lenders want to know that your income is high enough to pay back what you borrowed. The specific amount you have to earn depends on how much debt you refinance. They also want to know that your earnings are stable, so you are less likely to experience a loss of income that will affect your future ability to pay.
- Your debt to income ratio: Your debt to income ratio (DTI) is a measure of total monthly debt payments in relation to income. Lenders want to see a reasonable debt-to-income ratio to ensure that you are not deceived when it comes to debt payments. The lower your DTI, the better your chances of getting a loan approved.
- Your student loan payment history: The history of timely payments on your current loan is critical. Lenders usually will not allow you to refinance student loans if you are in default or have a lot of late payments.
Most student loan refinancing lenders consider a combination of all of these factors as well as your credit rating. A stronger financial reputation in one area can help you overcome deficiencies in another.
If you are planning to refinance your private student loans, be sure to compare student loan refinancing rates before applying so you can be sure to find the best deal for you.
Find the right lender for you
Getting a student loan refinancing loan can potentially save you a lot of money if you get a new loan at the current low interest rates.
Of course, you don’t want to refinance federal student loans because that would mean giving up the chance of forgiveness as well as other benefits for the borrower. But if you have private loans, it is worth seeing if you can qualify for an affordable new loan.
Credible makes it easy to evaluate your options. Visit Credible to view a rate table that compares rates from multiple lenders. to see if refinancing is right for you.
Do you have a financial question but don’t know who to ask? Write to the Safe Money Specialist at email@example.com and your question can be answered by Credible in our Money Expert column.