Student loan refinancing is one of the best ways to save money when paying off your student loans. By refinancing, you’d take out a new loan with more favorable terms to repay your current debt. Ideally, this new loan will have a lower interest rate or monthly payment (or both). Although you may be wondering what credit score is needed to refinance your student loan.
Unfortunately, not everyone is eligible. Oftentimes, you need a strong credit score to refinance student loans, along with other qualifications to prove that you are a creditworthy borrower. Here’s what you need to know.
Do You Need Good Credit to Refinance Student Loans?
Yes, student loan lenders will generally require borrowers to have good credit to qualify for loan refinancing. This usually means a credit score of 700 or higher.
Good credit not only determines whether you are eligible for loan refinancing, but can influence how competitive your interest rate is. Certain lenders will refinance student loans for borrowers with weak credit, but the interest rates on these loans are usually higher.
If you want to refinance your loans, it’s crucial to look across multiple lenders to make sure you’re getting the most competitive terms.
>> MORE: Find what student loan refinance rates you qualify for if you have bad credit
Credit Requirements of Top Lenders
Each lender will have its own unique credit requirements for refinancing. We’ve compiled a list of top lenders to make the search easier for you.
>> MORE: Compare credit score requirements to refinance your student loans
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Arkansas Student Loan Authority (ASLA)
If you’re an Arkansas resident looking to refinance your medical loans, consider the Arkansas Student Loan Authority. ASLA is a state entity that offers loan refinancing for Arkansas residents.
Fixed APR range: 3.50% to 7.48%
Variable APR range: N/A
Refinancing amount: $5,000 to $250,000
Brazos
Brazos is a non-profit lender that offers competitive loan refinancing terms for Texas residents. To qualify with Brazos, it is recommended that you have a strong credit score, a steady income, and at least a bachelor’s degree.
Fixed APR range: 4.90% to 6.99%
Variable APR range: 5.32% to 9.12%
Refinancing amount: $10,000 to $400,000
College Ave
College Ave offers competitive interest rates, zero fees, on-site loan servicing, and a cosigner release option for qualifying borrowers. A highlight about College Ave is that they do not require borrowers to have a degree or qualify for financial aid.
You must be a U.S. citizen or a permanent resident who is not based in Maine or Oregon to qualify for loan refinancing with College Ave.
Fixed APR range: 6.99% to 11.99%
Variable APR range: 6.99% to 11.99%
Refinancing amount: $5,000 to $300,000, depending on degree type
Earnest
Earnest is well-known in the student loan industry and is backed by competitive refinancing terms and student loans. By refinancing your student loans with Earnest, you have access to merit-based rates, customizable payments and loan terms, as well as the option to skip one monthly payment every year.
Refinancing is not available in Kentucky and Nevada, and you will not have the option to add a cosigner to your application.
Fixed APR range: 4.96% to 9.79% (including 0.25% auto-pay discount)
Variable APR range: 5.49% to 7.94% (including 0.25% auto-pay discount)
Refinancing amount: $5,000 ($10,000 for California residents) to $500,000
EdvestinU
EdvestinU is a student loan program under the New Hampshire Higher Education Loan Corp, a non-profit based in New Hampshire. You can refinance your student loans with EdvestinU without a degree and have access to special perks if you are a New Hampshire resident. You must be a U.S. citizen or permanent resident who qualifies for financial aid.
Fixed APR range: 4.41% to 7.78%
Variable APR range: 8.04% to 9.79%
Refinancing amount: $7,500 to $200,000
INvestED
INvestED is best for students who are Indiana residents or attend school in Indiana. You must be a U.S. citizen or qualifying resident who receives financial aid at your academic institution. The lender offers competitive interest rates, 36 months of academic deferment, and does not require a degree to qualify.
Fixed APR range: 5.85% to 9.48%
Variable APR range: 8.63% to 12.27%
Refinancing amount: $5,000 to $250,000
ISL Education Lending
ISL Education Lending is a non-profit that offers loan refinancing options with competitive interest rates, zero fees, and a cosigner release option. You also do not need a degree to qualify, which is a perk.
You must be a U.S. citizen or permanent resident who is not based in Maine or Oregon to qualify.
Fixed APR range: 3.94% to 8.48%
Variable APR range: N/A
Refinancing amount: $5,000 ($10,000 for California residents) to $300,000
LendKey
LendKey connects borrowers with small lenders, credit unions, and community banks. You can refinance with LendKey if you’re a graduate student with a steady income and strong credit history.
Fixed APR range: 4.99% to 10.68%
Variable APR range: 4.54% to 7.39%
Refinancing amount: $5,000 to $300,000 (depending on degree type)
MPOWER
MPOWER is a great lender that refinances loans for domestic, international, and DACA undergraduate and graduate students. To refinance with MPOWER, your loan(s) must not be cosigned.
Fixed APR range: 11.74% (12.69% APR)
Variable APR range: N/A
Refinancing amount: $2,001 to $100,000
Nelnet Bank
Nelnet Bank is an online bank that provides loan refinancing for qualifying borrowers. They offer competitive terms, including flexible repayment options, a cosigner release option, 12 months of forbearance, and the ability to refinance your parent PLUS loan in your name.
To refinance your student loans with Nelnet Bank, you must be a U.S. citizen or a permanent resident with a Social Security Number. You also must have at least a bachelor’s degree.
Fixed APR range: 7.12% to 11.19%
Variable APR range: 7.60% to 14.50%
Refinancing amount: $5,000 to $225,000
SoFi
SoFi is a well-established name in the student loan industry that offers one of the most competitive rates for loan refinancing. To qualify, you must have an associate’s degree or higher.
SoFi also allows borrowers to refinance parent PLUS loans in their own name, offers loan forbearance and deferment, and doesn’t have any origination fees.
Fixed APR range: 4.49% to 8.99%
Variable APR range: 4.49% to 8.99%
Refinancing amount: $5,000 to your total outstanding balance
Eligibility Requirements to Refinance Student Loans
While there is a minimum credit score to refinance student loans for many lenders, your credit score isn’t the only consideration. Here are a few other factors that impact your eligibility:
A Strong Credit History
A strong credit history generally consists of the following:
- On-time and in-full loan payments
- No history of default
- No history of bankruptcy
- No history of delinquency
Your credit history shows your reliability as a borrower. The stronger your credit history is, the easier it is for you to secure competitive interest rates and loan terms.
>> MORE: Refinance my student loan today
Consistent Income
Having a steady, consistent income will show lenders that you have a stream of capital you can use to make loan payments.
A Low Debt-to-Income (DTI) Ratio
Your debt-to-Income (DTI) ratio shows the proportion of debt and income that you have. To calculate your DTI, divide your monthly debt payments by your gross monthly income.
For example, let’s say you have $2,000 in monthly payments for outstanding debt and make a monthly income of $5,000. If you divide $2,000 by $5,000, you get .4, which is a DTI of 40%.
If you have a lower DTI, this demonstrates that you make more money than you owe. However, if you have a high DTI, this shows lenders that you owe more than you make. A DTI of 35% or less is considered a good DTI.
Proof of Graduation
Generally, lenders will require borrowers to have a degree to be eligible for loan refinancing. However, there are a few lenders that don’t have this requirement.
What is the Credit Score Requirement to Refinance Student Loans?
It depends. For example, based on the lenders above, the required credit score to refinance student loans varies from 640 to 720. However, the better your score, the better terms you are likely to receive.
What to Do If You Don’t Have the Credit Score to Refinance Your Student Loans?
If you don’t meet the credit requirements to be eligible for student loan refinancing, don’t fret. You may still be able to qualify by adding a cosigner to your application.
A cosigner is an individual who agrees to take responsibility for your loan if you fail to make payments on it. Generally, a cosigner is an immediate family member, relative, or close friend.
Once you identify an individual who is willing to be a cosigner for you, you’ll want to compare the options that allow you to add a cosigner. Look at terms such as interest rate, cosigner release options, repayment terms, and more. Consider using Sparrow as a tool to compare your options and see how different cosigners impact the loan terms.
>> MORE: What is a student loan cosigner?
Closing Thoughts From the Nest
As you explore your loan refinancing options, remember to compare your options across interest rates, repayment plans, borrower protections, and other important considerations. Loan refinancing is a beneficial thing to do, but you’ll want to find the best option for your personal and financial circumstances.
You don’t have to make this decision alone. Sparrow’s form allows you to find the best student loans with the best interest rates for you. The platform makes it easy for you to compare real pre-qualified rates without having to apply with lenders one-by-one. Save time by finding the ideal interest rate for you with Sparrow!
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