How to Get Approved for Student Loan Refinancing

Sheryl Nance-Nash Updated on January 2, 2018

Sometimes people get ideas in their heads that are based on assumptions rather than facts. But when it comes to your finances, believing myths can cost you.

Take student loan refinancing, for example. Some people don’t even apply because they think they aren’t eligible. Continuing to make high monthly payments when you don't need to is like banging your head against the wall ... but you’ll feel the most pain in your pocket.

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Refinancing student loans can be a game changer.  A recent Comet review found people who refinanced saved an average of $259 a month and $19,231 over the life of the loan

With so much to gain, it’s worth going through the process to refinance. There’s much you can do to up the chances of getting approved. Here's a quick look at what lenders are looking at—and what you can do before you approach a lender to boost your chances of getting approved for refinancing. 

Impress them with your credit score

Your creditworthiness is highly important to lenders. To judge that, lenders look at your credit score.

If your credit score is in the 690 to 850 range, you are likely to be a good candidate for student loan refinancing.

Know when less is more

While lenders want your credit score to be high, they also want your debt-to-income ratio to be low (in the 20-36% range).

To calculate your ratio, add together all of your monthly debt payments and divide the sum by your gross monthly income, i.e., what you earn before taxes.

Longevity counts

Hopefully you haven’t been a job hopper.  Lenders want to see stability. They’ll review your employment history and income before approving your refinance.

Pay your bills on time

If you aren’t currently paying your student loan and other bills on time, lenders may think you have a bad habit that you can’t shake. If you have a track record of paying responsibility, that helps show that you are a low risk.

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Before you approach a lender ...

Here's how make sure you're refinance-worthy:

Check your credit report

You can request and receive your credit report for free each year from the three major credit reporting agencies at AnnualCreditReport.com.

Look over your report, and make sure there are no inaccuracies. If you find any, contact the credit reporting bureau to dispute and remove them.

Pay down credit card debt

When you pay down your credit card debt you pump up your credit score.

If you have high balances with high interest rates, look into consolidating to lower-rate cards. Then work on paying down those balances to below 30% of your credit limit. 

Look for a co-signer

If your credit isn’t as strong as it should be, find a parent, spouse, or family friend who has good credit to cosign the refinance application with you.

Having a cosigner not only improves your chances for approval, but it may also help you secure a lower interest rate.

Gather essential documents

You’ll want to have handy your most recent loan statement for each loan that you want to refinance, which should show your loan servicer name and address, along with the loan balance and interest rate.

Expect to show your driver’s license or passport, bank statements, pay stubs, tax return, and proof of graduation.

Are you Refi Ready? It only takes 10 seconds to find out how much you could save. 

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Published in: Refinance

About the Author
Sheryl Nance-Nash

Sheryl Nance-Nash is a freelance writer based in New York City. She specializes in personal finance, business, small business, and travel topics. Her articles have appeared in Money, Newsday, The New York Times, DailyFinance.com, ABCNews.com, Forbes.com, TheFiscalTimes.com, among others. When she's not writing about retirement, taxes, student loans, credit, debt, and everything under the personal finance umbrella, she writes about businesses—big and small—their victories and the challenges they face. Sheryl is married with a grown daughter. Her favorite pasttime is traveling. She loves chronicling her adventures and exploring new places and cultures. Read more by Sheryl Nance-Nash

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LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

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SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
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Find out what interest rate SoFi can offer you here.

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Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

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Get a personalized review of your refinancing options with CommonBond today.

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Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

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Get your personalized, pre-approved rates in less than 5 minutes.

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