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How to Refinance Student Loans With Bad Credit

If you want to refinance with bad credit, your best bet is to use a cosigner or work on improving your credit first.

Dori Zinn Dori Zinn Updated February 16, 2021

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Refinancing your student loan debt with bad credit might seem like a difficult task, but it’s definitely possible. Instead of worrying about the hurdles, here are a few things you can do if you want to refinance student loans with bad credit:

  1. Use a cosigner
  2. Improve your credit first
  3. Compare lenders
  4. Consider federal consolidation

1. Use a cosigner

A cosigner is someone — usually a parent, friend, or relative — who has good to excellent credit and will sign onto your loan with you. Usually you’ll need a cosigner if your credit alone won’t qualify you for refinancing. A cosigner with excellent credit will not only help you qualify, but they can also get you a lower interest rate.

Remember that if you can’t make payments or your payments are late, your credit score will take a hit — and so will your cosigner’s. It’s important to set up ground rules and a repayment plan with your cosigner before taking on student loan refinancing. Talk about the risks involved and what happens if you think you’ll need to make a late payment.

Learn More: Refinance Student Loans With a Cosigner in 3 Steps

2. Improve your credit first

Before you start the process of refinancing your student loans, you may want to take some time to improve your credit score.

You can improve your credit score by:

  • Paying your bills on time: Set calendar reminders or put your bills on autopay so you never miss a monthly payment.
  • Paying off outstanding debt: The lower your credit utilization — or the amount of outstanding credit you owe — the better you look to creditors. You should typically aim to keep your credit utilization under 30%, but your score could be affected before you hit that level.
  • Keeping old accounts open: Older accounts — even those you don’t use often — tell creditors you’ve spent a long time building credit. Closing accounts will lower the length of your credit history, which could be a turnoff to some lenders.
  • Not opening new accounts: When you open a new credit card or take out a loan, that triggers a hard inquiry, which can temporarily cause your credit score to dip. They also lower your average credit age. Try to avoid opening new accounts, if possible.

As you’re working to improve your credit score, keep tabs on it often to see your progress. You can also check your credit report every year for free at AnnualCreditReport.com. Use this as a guide to see if you have any errors or potential fraud, which can also hurt your score.

3. Compare lenders

Not all lenders offer the same repayment options. Some of the best companies to refinance student loans have minimal fees and a low threshold for qualifying. That means if you’re trying to refinance your student loans with bad credit, you’ll be able to get a loan.

When comparing lenders be sure to pay close attention to:

  • Rates: Usually, if companies accept borrowers with low credit scores (without a cosigner), interest rates tend to be higher. Make sure this is something that’s within your budget.
  • Length of repayment: Look at the total length of your repayment plan. Some lenders offer terms up to 20 years. This is helpful if you need to have low loan payments to stay on track. But keep in mind that the longer your loan terms, the more you will end up paying in interest.

The student loan consolidation companies in the table below are Credible’s approved partner lenders. Because they compete for your business through Credible, you can request rates from all of them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like.

LenderRates from (APR)Min. credit scoreMin. annual income
advantage education loan consolidationFixed: 4.54%+
Variable: N/A
Does not disclose$24,000
brazos student loan refinancingFixed: 2.95%+
Variable: 1.89%+
690$30,000 with cosigner
$60,000 without
citizens bank student loansFixed: 2.97%+¹
Variable: 2.24%+¹
Does not disclose$24,000
college ave student loansFixed: 3.34%+2
Variable: 3.24%+2
Does not discloseDoes not disclose
elfi student loansFixed: 2.79%+3
Variable: 2.39%+3
680$35,000
invested refinancingFixed: 3.47%+4
Variable: 2.47%+4
670$36,000
iowa student loan refinancingFixed: 2.80%+5
Variable: N/A
670None
mefa refinancingFixed: 3.05%+
Variable: 3.05%+
670$24,000
penfed purefy student loan consolidationFixed: 2.99%+
Variable: 2.15%+
670$24,000 with cosigner
$42,000 without
rhode island student loan authority refinancingFixed: 3.19%+
Variable: N/A
680$40,000
sofi refinancingFixed: 2.99%+6
Variable: 2.85%+6
Does not discloseDoes not disclose
Considering student loan refinancing?
Compare Rates Now

All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 5Iowa Student Loan Disclosures | 6SoFi Disclosures

It might also be helpful to estimate how much your potential monthly payments and the total loan repayment will be using a student loan refinancing calculator like the one below.

Step 1. Enter your loan balance

? Enter the remaining amount of the loans you’d like to refinance $

Step 2. Enter current loan information

? Enter the average annual interest rate of the loans you’d like to refinance %
? Enter the monthly amount you currently pay on your loans (or enter remaining term) $
? Enter the amount of time left to repay your loan (or enter monthly payment) years

Step 3. Enter your new loan information to start calculating your savings

? Enter an estimated new interest rate. %
? Enter the monthly amount to pay on your new loan (or enter new loan term) $
? Enter the amount of time you have to repay your loan (or enter monthly payment) years
Lifetime Savings Increased Lifetime Cost $
New Monthly Payment $
Monthly Savings Increased Monthly Cost $

If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $.


Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates

Checking rates won’t affect your credit score.

4. Consider federal consolidation

If you can’t qualify for refinancing with your credit and you’re just looking to consolidate your federal loans, you can try federal loan consolidation instead.

Consolidation is like refinancing: You’ll combine all your loans into one. But you won’t be taking out a brand new loan, like you would if you refinanced. Instead, the interest rate is the weighted average of all your student loans combined, rounded to the nearest one-eighth percent.

Direct Consolidation Loans are only available through the U.S. Department of Education for federal student loans. If you have a mix of federal and private student loans, only your federal loans will qualify.

If you have private student loans or a mix of both, you might need to consider refinancing, though.

Is it time to refinance your student loans?

Now that you know what it takes to refinance, you’ll want to start looking at exactly how to refinance your student loans. Check out lenders, compare rates and terms, then choose the best option for you and complete your application.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders with no impact on your credit score
  • Won’t impact credit score – Checking rates on Credible takes about 2 minutes and won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

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About the author
Dori Zinn
Dori Zinn

Dori Zinn is a student loan authority and a contributor to Credible. Her work has appeared in Huffington Post, Bankate, Inc, Quartz, and more.

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