How to Refinance Student Loans with Bad Credit

Need to refinance student loans with bad credit? It’s possible! Learn more about your options for refinancing loans with bad credit.

Updated by Chandni Agarwal on 10th October 2021

If you carry student loan debt, you’re not alone. About 42.9 million Americans also have student loans, typically worth around $30,000 each. After a while, you might wonder if you’re really getting the best deal possible out of your loan. Is your loan term too short, resulting in super high payments? Or is your interest rate higher than that of your friends’ loans?  These are questions that might prompt you to consider refinancing student loans, even if it means refinancing student loans with bad credit. Now’s a great time to consider refinancing, since student loan rates are at an all-time low

Will lenders refinance a student loan with bad credit? How about refinancing private student loans with bad credit? Read on to learn everything you need to know about student loan refinance for bad credit, and how to refinance student loans with bad credit. 


Table of Contents


Things to Consider Before Refinancing Student Loans

with Bad Credit


What Lenders Look At


Before you apply for student loan refinancing, make sure you know exactly what lenders will need from you to consider and process your application. They will look at:


  • Credit Score
  • Income
  • Credit History
  • Any Recent Defaults on Student Debt
  • Debt-to-Income Ratio


A Cosigner Helps


If you have access to a co-signer with their finances in order, you can seriously boost your refinance application. Many lenders even offer cosigner release options, which allow you to release your co-signer once you’ve made enough timely payments, or once your credit situation has improved. 


When You Shouldn’t Pursue Student Loan Refinancing


There are some situations in which student loan refinancing won’t be a good match. 


   1. You’re Considering Student Loan Forgiveness or Other Federal Relief Programs

Refinanced federal loans are ineligible for certain programs like the Public Service Loan Forgiveness program, the Teacher Loan Forgiveness Program, and Income-Driven Repayment.


  2. You Declared Bankruptcy

Most student loan refinance lenders won’t consider your application if you’ve declared bankruptcy in the last 10 years. 


   3. You Won’t Save Money

The purpose of refinancing a student loan is to save money. If your refinance options won’t help you in that area, there’s no point in going through the trouble of refinancing.  

For example, if you have a $50,000 loan on a 7-year term with a 6% interest rate, and a refinance lender offers you a 5% interest rate for a 10-year term, you won’t save any money. In fact, you’ll pay more in the long run. 

Make sure you calculate your new payments and interest paid over time to understand how attractive a refinance offer is. 

How to Refinance a Student Loan with Bad Credit

If you’ve assessed your personal situation and decide that a student loan refinance for bad credit is what you need, congratulations! Let’s go through how to refinance a student loan with bad credit, step-by-step.


   1. Make Sure a Student Loan Refinance is Right For You

Consider the situations in the previous section, and really think hard before you pursue a student loan refinance. 


   2. Do Your Research

There are many student loan lenders out there, and those lenders each offer multiple student refinancing options. Make sure you look at different features and figure out which ones fit your needs best. For example, some lenders require that you graduated from college. If you haven’t, find a lender that doesn’t list this as a requirement. 


The next section will list a few refinance lenders, to help you get started on your research. 


   3. Get Multiple Quotes

After deciding on a few lender contenders, obtain quotes from each one. You want the lowest rate without a ridiculously long loan term. Try to find out the rates through their online resources, but reach out to them if necessary. 


Remember, some lenders won’t share rates until you submit a full application, which results in a hard credit inquiry, and that can affect your credit. Usually, however, they only ask for a pre-qualification, which results in a soft inquiry that doesn’t affect your credit. 


   4. Pick Your Lender and Submit Your Application

Once you’ve decided on a lender, tell them the good news! You’ll then need to submit your full application, which might include a requirement to present the following documents:


  • Proof of graduation
  • Proof of identity
  • Proof of employment
  • Proof of residency
  • Loan verification statements


   5. Don’t Jump The Gun

Don’t stop making payments to your old lender immediately. You need to wait for confirmation that the loan payoff process is complete  — then you can start making payments to your new lender. 

Private Lenders that Refinance Student Loans with Bad Credit


If you have bad credit, you might feel nervous about starting the loan refinance process. Don’t worry — here are a couple of lenders that refinance loans even for borrowers with bad credit. 



Minimum Credit Score Needed to Refinance




No minimum listed, soft credit check performed


700 listed, with exceptions. Soft credit check performed



Earnest is one of the most consumer-friendly lenders. Earnest has consistently great reviews, and is known for flexible, customizable payment plans and no fees. They also allow you to have a cosigner on your application. 

Unfortunately, Earnest only offers refinancing to current students. Additionally, you cannot access Earnest refinancing if you live in Kentucky or Nevada. 

Learn more about Earnest Student Loan Refinancing


LendKey is another popular refinance option, and like Earnest, they don’t charge any fees for their service and allow a cosigner and cosigner release. They list 700 as a minimum credit score requirement, but offer great flexibility as they match you with other lenders that could help you. One drawback is the possibility of a credit union or other lender match requiring more from you in the process. Finally, they offer flexible loan terms with a maximum amount of $125,000.  

Learn more: LendKey Student Loan Refinance


Credible resembles a third-party online loan marketplace. What’s great about Credible is that you can find multiple loan quotes all in one place, as they send estimates from multiple lenders that use their platform.

There is no minimum credit score or income requirement, as Credible will search for lenders that meet your situation and needs. 

Learn more: Credible Refinancing and Consolidation Review

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

Quick Tips to Improve Your Credit Score

Your credit score is always a factor that lenders consider when deciding whether or not to lend you a new loan or refinance an existing one. Here are some quick tips to help you improve your credit score:

    1. Check Your Credit Score

Did you know that 18% of people aged 18 to 24 (the prime age for students) don’t even check their credit score? You should know your credit score so that you can measure progress. Don’t worry — checking your credit score won’t impact your credit. It’s known as a soft inquiry, since you’re not officially applying for credit. 

    2. Pay Bills On Time

Don’t be late on your payments. This is the easiest thing you can do to improve your credit score. Set alarms, reminders, and whatever you need to make sure you pay your bills on time. 

   3. Open A Couple of Credit Accounts (if you don’t have any, or very few)

Many students don’t have poor credit; but, they have non-existent credit. Apart from a student loan, many students don’t have the same credit accounts that their parents have, like utility bills. If you’re just starting out, take on a secured credit card to build your credit in a safe manner, or convince someone close to you (and responsible!) to add you as an authorized user on their credit card. Don’t go nuts with new accounts though. You just need a couple to build your credit, so there’s no need to overextend yourself. 

   4. Lower your Credit Utilization Rate

Your credit utilization rate shows how much money you owe compared with how much credit you have available. If you owe $20,000 and only have $21,000 in available credit, you have a high credit utilization rate. This might indicate that you’re financially stretched thin, and affects your credit score negatively. Try to pay down your debts as best you can if you have a high credit utilization rate, either through finding extra income through a part-time job, or simply not accepting credit increases if you feel you’ll be tempted to use too much. 

Worried about your college tuition? Learn more about the best student loans.


Alternatives to Student Loan Refinance for Bad Credit

If you don’t think student loan refinancing is the best option for you, don’t worry. There are other options available to help you manage your student loan debt. 

1. Income-Driven Repayment Plan

If you have a federal loan, you can sign up for an income-driven repayment plan. This loan plan uses your income to dictate monthly payment amounts, and helps you add more flexibility in time. However, you will likely pay more interest over time with an income-driven repayment plan. 

2. Debt Consolidation

Debt consolidation entails combining all of your loans into one monthly payment. Consolidation often saves you in interest, but it’s usually only permitted for federal student loans. Keep in mind that debt consolidation sometimes affects your credit negatively. 

Frequently Asked Questions (FAQs)

Can You Refinance Student Loans with a 500 Credit Score?


Earnest and LendKey might not be great options for someone with a 500 credit score, as they list minimum requirements of 650 and 700. However, if your credit score is as low as 500, you may have better luck using Credible, which searches through multiple lenders to find estimates.


What Do You Need to Qualify for Student Loan Refinancing? 

Lender requirements vary for student loan refinancing, especially for a bad credit refinance. However, some things that lenders look at include:


  • Credit Score
  • Income
  • Credit History
  • Any Recent Defaults on Student Debt
  • Debt-to-Income Ratio


What is the Minimum Credit Score for a Cash-out Refinance?

Every lender has different requirements for minimum credit scores. Your best bet is to check individual lender websites to find more specific information about minimum credit scores. 

Other blogs you may be interested in:

What is Student Loan Refinancing?

Minimum Credit Score Needed for Refinancing Student Loans

Refinance Student Loans With A Cosigner