Minimum Credit Score Needed for Refinancing Student Loans

Refinancing your student loans is an excellent way to manage student loans. What is the minimum credit score needed for refinancing student loans? Learn more!

Updated by B Harshitha on 21st October 2020

Dealing with multiple, bulky student loans with terms, rates, and conditions of their own can be quite difficult. Keeping up with all the specifications, deadlines and rules is certainly likely to be very challenging, especially since the consequences of not being up to date can be disastrous. Refinancing is an excellent way by which managing student loans can be made an easier task. Refinancing can help borrowers avail lower interest rates, better terms, and conditions. Lesser interest rates can lead to borrowers saving up on money that they will spend on interest otherwise. 

But qualifying for refinancing is not quite simple. Getting approved for refinancing your student loans depends on the borrower’s debt-to-income ratio and credit score. Much like how credit scores needed to get student loans to depend on the lender, the credit scores needed for student loan consolidation varies with companies. So is there a minimum credit score needed for refinancing student loans? The minimum credit score that most private lenders look for is 650. Although, this value can vary amongst different lenders. 

We will discuss in detail the student loan refinancing credit requirements, refinancing your student loans with different lenders, and ways by which you can improve your credit score. 

TABLE OF CONTENTS:

Minimum credit scores required to refinance student loans

Companies are very secretive about the credit scores that they accept to refinance student loans. We have presented approximate information about the minimum and average scores accepted by a few companies here.

Lender Minimum Credit Score Needed to Refinance
LendKey 660
Earnest 650
CommonBond 660
Education Loan Finance (ELFI) 680
College Ave mid 600s
Splash Financial 700

The average scores that these companies accept to refinance are pretty high. However, their minimum scores are certainly achievable.

650 is a score that marks the beginning of most lenders’ approval range. About 70% of consumers have scores that fall in the acceptable range of student loan refinance credit scores.

A score above 800 is considered to be excellent. Very few people have scored so high and to achieve such a high score, a consumer must have an in-depth understanding of how the credit system works. Borrowers with very high credit scores tend to drive the average accepted credit scores for refinancing high. As more people with moderate to good credit scores become aware of the benefits that come with refinancing and start to pursue lower interest rates, the average credit scores are likely to drop.


Worried about your college tuition? Find the best student loans just for you


Factors that can help improve your credit score

You do not have to worry if your credit score falls short of what is required by these companies. Several factors can help boost your score even in a short period of time. The factors are as follows:

  • History of your payments – This takes up to 35% of your credit score. So how is your payment history evaluated? The recent payment transactions are prioritized, so any recent payments your credit shows are given more credibility. 

  • Credit Usage – This factor compares the debt on your credit card to the amount of credit still available. Credit Utilization makes 30% of your credit score.  Credit utilization below 30% is said to be favorable. Your credit score will be better if your balance is low.

  • Length of Credit History – This holds value for about 15% of your credit history. This is one factor that can not be helped by a borrower. 

  • Types of Credit – This makes up 10% of your credit score. You can possess various types of credit cards to make up to 10%. 

  • Soft credit pull – This factor makes up 10% of your credit score. Hard inquiries can hurt your credit score. Borrowers interested in refinancing should look out for soft checks and other inquiry methods on lenders.

  • Making on-time payments - If you can make on-time payments without your loans going to delinquent or default, your credit scores are in good condition. This will not only help you during the refinancing process but also be eligible for loans that you may require to borrow in the future. 


If your credit score is low, learn about how to refinance student loans with bad credit


Other factors considered while refinancing student loans

While rejections on applications for refinancing made by people with poor credit scores can be anticipated, it might be surprising to learn that quite a several borrowers with excellent credit scores have also been rejected before. This is because another very important factor to qualify for student loan refinancing is a borrower’s debt-to-income ratio. Here are other important factors to refinancing

  • Your debt-income ratio is important. A score below 20% is considered to be excellent

  • As mentioned above most private lenders look for borrowers with a minimum credit score of 650

  • A steady job will assure the lender that you can make continually on-time payments

  • Most private lenders require you to refinance a debt of a minimum of $5,000

  • You are expected to have a degree and in some cases a job offer in handy to be eligible to refinance

  • A cosigner with a good credit score and income can help you in the refinancing process. But not all lenders welcome a cosigner

If a major part of your paycheck gets devoted to credit card bills, student loans, and mortgages, then this factor may be a hindrance to getting approval for student loans to refinance. 

Borrowers with credit scores near the acceptable margins with excellent debt-to-income ratio are more likely to get approved for refinancing than people with the alternative case. A borrower’s mere income could make the difference between approval and rejection.


Looking to refinance your student loans? Find the best student loan refinancing lenders


While borrowers are more than likely to get bummed out for getting rejected for low credit scores, it is important to realize that there are alternatives to going about this. Income-driven repayment plans and student loan forgiveness plans are just some of the many borrower protection plans that can be availed on federal student loans. These perks do not come on refinancing with private companies. Therefore, keeping federal student loans as they are, that is, without refinancing them may be the best option for people who are struggling to make payments.

The level of ease of difficulty prevalent in getting approval for refinancing your student loans may differ from lender to lender. And the strategy that should be adopted will depend on the borrower. People with low credit scores are advised to apply with several companies and not just one. If despite your best efforts, you are unable to secure a refinance deal, try working on improving your credit score and debt-to-income ratio. Restart the application process after any changes appear. 

Other blogs you may be interested in

Private Student Loan Refinancing

Should You Refinance Your Student Loans?

Does Refinancing Student Loans Hurt Your Credit Score?




Frequently Asked Questions

  • 1.What is the lowest Credit Score students require for there student loans? 

    Most lenders demand an average score of 670 or higher with respect to range adhered but if you stand as a candidate with no credit records then associate yourself with a co-signer who would help you take up the loan with a good credit score.

  • 2.How to get approval for Refinancing student loans?

    To get approved for student loans, a student needs to have an average acceptable credit history or a stable flow of income and even sometimes in some cases a co-signer.

  • 3.Are credit scores hampered by refinancing student loans?

    There is no serious effect on credit scores to be damaged except hard enquires that are conducted on borrowers with too many loan applications that could decrease the score to 5 points less than the actual score.

  • 4.Are student loans available on no credits?

    yes, it is possible to get student loans with no credit.

  • 5.Is it possible to get student loans without any co-signer?

    yes, it is possible to get student loans without any co-signer. All you need is a good credit history and scores.

  • 6.How credit scores get affected after paying off debt?

    Yes, having multiple accounts could hamper your credit scores as during calculations they are taken into account but if you have a single account then there are no issues of danger.

  • 7.Is refinancing a good choice for a student loan? How it benefits the credit score?

    Yes, it is a good option for student loans as it comes with its own benefits and low rates of interest. Refinancing keeps a clear record of the credit history of the borrower and timely payments to the lender could boost the credit scores.

  • 8.What is the best time-period for refinancing student loans?

    It is totally variable on the time period that the borrower chooses for loans but summers the appropriate season for refinancing student loan applications as per students .