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This article first appeared on the Credible blog.

You typically need good to excellent credit to qualify for student loan refinancing — which means it might be difficult to get approved if you have bad credit. However, there are a few options that could help you qualify for refinancing even with less-than-perfect credit.

If you’re looking for student loan refinancing but you have bad credit, start by comparing student loan refinance rates on the Credible platform. Checking your rates won’t hurt your credit score.

Here are three ways to refinance student loans with bad credit:

1. Compare lenders

Credit requirements vary between lenders: While you’ll need good to excellent credit to qualify with some, others accept lower credit scores — and some have no minimum required credit score at all. This is why it’s important to compare as many student loan refinance companies as you can to find the right loan for you.

In addition to credit requirements, be sure to consider interest rates, repayment terms, and any fees the lender charges.

Also keep in mind that while some lenders offer student loan refinancing with bad credit, these loans generally come with higher interest rates compared to good credit loans.

Tip: If you’re struggling to get approved, consider applying with a cosigner who has good credit to improve your chances. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.

Here are Credible’s partner lenders that offer student loan refinancing for bad credit.

Advantage: Best for parents who want to transfer Parent PLUS Loans to their child

Advantage is one of the few lenders that allows parents to refinance Parent PLUS Loans into their child’s name. It also offers a graduated repayment plan, which could make it a good option if you expect your income to grow in the future.

With Advantage, you can refinance $7,500 up to $500,000 (depending on your degree and loan type) with repayment terms ranging from 10 to 20 years.

Pros

  • 0.25% autopay discount
  • Allows parents to transfer Parent PLUS Loans into their child’s name
  • Offers graduated repayment plan

Cons

  • Variable rates not offered
  • Will likely need a cosigner to qualify if you have bad credit

Brazos: Best for Texas residents

If you live in Texas and want to refinance your student loans, Brazos might be a good choice. You can refinance $10,000 to $400,000 (depending on your degree) with a repayment term ranging from five to 20 years.

Pros

  • 0.25% autopay discount
  • No application, origination, or disbursement fees
  • Forbearance options available

Cons

  • Might be hard to qualify without a cosigner if you have poor credit or low income
  • Cosigner release not offered
  • Only available in Texas

Citizens Bank: Best for borrowers who didn’t complete their degree

Unlike many other refinancing lenders, Citizens Bank doesn’t require borrowers to have graduated to potentially be eligible for refinancing. Additionally, if you already have an account with Citizens Bank, you might qualify for a rate discount — and you could get another 0.25% off your rate by signing up for autopay.

With Citizens Bank, you can refinance $10,000 to $750,000 (depending on your degree and loan type) with terms from five to 20 years.

Pros

  • Degree not required
  • 0.25% autopay discount
  • 0.25% loyalty discount

Cons

  • Doesn’t disclose minimum income or credit score requirements
  • Must have at least $10,000 in student loans to refinance
  • Long cosigner release period (36 months)

College Ave: Best for a variety of repayment terms

If you refinance your student loans with College Ave, you’ll have multiple loan terms to choose from ranging from five to 20 years. This can make it easier to match your monthly payment to your budget — just keep in mind that it’s usually best to opt for the shortest repayment term you can afford to avoid paying more in interest.

With College Ave, you can refinance $5,000 to $300,000 (depending on your degree).

Pros

  • Variety of repayment terms available
  • 0.25% autopay discount
  • Cosigner release offered after 24 months

Cons

  • Doesn’t disclose minimum income and credit score requirements
  • Can’t transfer Parent PLUS Loans to child
  • Must have graduated to qualify

ELFI: Best for high loan balances

Unlike many other lenders, Education Loan Finance (ELFI) has no maximum loan limit for refinancing — you’ll just need to have at least $10,000 to refinance.

This could make it a good choice for borrowers who attended graduate or professional programs, such as medical school or law school.

Pros

  • No loan maximum
  • Variable rates capped at 9.95% APR
  • Up to 12 months of forbearance available to borrowers experiencing financial hardship

Cons

  • Cosigner release not offered
  • Limited repayment terms available for parent borrowers
  • Must have at least $10,000 to refinance

INvestEd: Best for borrowers who might need forbearance options

With INvestEd, you can refinance $5,000 to $250,000 with repayment terms ranging from five to 20 years.

Additionally, INvestEd offers up to 24 months of forbearance during the life of a refinanced loan (one to three months per forbearance) — more than many other lenders. This could be helpful if you experience financial hardship in the future.

Pros

  • 0.25% autopay discount
  • Up to 24 months of forbearance during the life of the loan (one to three months duration per forbearance)
  • Degree not required

Cons

  • Long cosigner release period (48 months)
  • Might be hard to qualify without a cosigner if you don’t have good credit or income
  • Can only refinance up to $250,000, which might not be enough for borrowers with high student loan balances (such as medical debt)

MEFA: Best for borrowers who attended public or nonprofit schools

The Massachusetts Educational Financing Authority (MEFA) offers refinancing on loan amounts starting at $10,000 up to the total amount of your qualified education debt. This could make it a good choice for borrowers who have a high amount of student loan debt.

Keep in mind that MEFA only works with borrowers who attended public or nonprofit schools — loans taken on to attend for-profit schools aren’t eligible.

Pros

  • Competitive rates
  • Degree not required
  • No application, origination, or disbursement fees

Cons

  • Might be hard to qualify without a cosigner if you have bad credit
  • Cosigner release not offered
  • No discounts available

PenFed: Best for spouses who want to combine their loans

With PenFed Credit Union, you can refinance $7,500 to $300,000 with repayment terms ranging from five to 15 years. PenFed is also the only major lender that allows spouses to refinance their loans together.

Pros

  • Cosigner release offered after just 12 months of on-time, consecutive payments
  • Interest capped on variable-rate loans
  • Allows parents to transfer Parent PLUS Loans into their child’s name

Cons

  • Must join the credit union to refinance loans
  • No discounts available
  • Might be hard to qualify without a cosigner if you have bad credit or low income

RISLA: Best for borrowers experiencing financial hardship

Private student loans don’t provide the same benefits and protections as federal student loans. However, unlike other private refinancing lenders, the Rhode Island Student Loan Authority (RISLA) offers an income-based repayment (IBR) plan for borrowers experiencing financial hardship.

This IBR plan works similarly to the federal IBR plan — payments are limited to 15% of your discretionary income, and RISLA will forgive any remaining balance after 25 years.

Pros

  • Can defer payments up to 36 months if you return to graduate school
  • Income-based repayment plan available
  • Degree not required

Cons

  • Cosigner release not offered
  • Variable rates not available
  • Charges late fees (6% of payment amount)

2. Improve your credit score

Generally, borrowers with higher credit scores qualify for better interest rates compared to those with bad credit.

If you can wait to refinance your student loans, it could be a good idea to spend some time improving your credit score first so you can have an easier time qualifying as well as potentially secure a lower interest rate in the future.

Here are a few ways to build your credit score:

  • Pay all your bills on time. Your payment history makes up 35% of your FICO credit score. By keeping up with all your payments, you can continue to build a positive payment history. Consider setting calendar reminders or setting up autopay for your bills so you won’t miss any of your monthly payments.
  • Pay down debt balances. Your credit utilization — or the total amount of outstanding credit you owe — makes up 30% of your FICO Score. Paying down debt balances (such as credit cards) can help lower your credit utilization and improve your credit score. Aim to keep your credit utilization below 30%.
  • Don’t close old accounts. Closing accounts will affect the length of your credit history, which in turn could lower your credit score. Even if you don’t use some of your accounts that often, it’s a good idea to keep them open so your credit won’t be affected.
  • Don’t take out new loans. When you apply for a new loan, the lender will perform a hard credit check. This could cause a slight dip in your credit score — though it’s usually only temporary. If you’re trying to build your credit, only apply for new loans if necessary to avoid dragging your credit score down.

Tip: As you’re working to build your credit, keep tabs on your credit reports to track your progress. You can use a site like AnnualCreditReport.com to review your credit reports for free each year. If you find any errors, be sure to dispute them with the appropriate credit bureaus to potentially boost your credit score.

If you can improve your credit score, you could qualify for a lower interest rate on refinancing in the future. This could help you save money on interest charges and even pay off your loan faster.

You can use Credible’s student loan refinancing calculator to see how much you could save by refinancing your student loans.

3. Apply with a cosigner

A cosigner can be anyone — such as a parent, relative, or trusted friend — who has good credit and is willing to sign onto a loan with you. Having a cosigner with good to excellent credit can make it easier to get approved for refinancing and might also qualify you for a lower interest rate.

Keep in mind: Your cosigner is just as responsible for the loan as you are. If you can’t make payments or make late payments, your credit will be damaged — and so will your cosigner’s. Before you apply for refinancing, it’s a good idea to talk with your cosigner about the risks involved. Also consider setting up a plan for what to do if you ever have trouble making payments.

If your cosigner qualifies you for a better interest rate, you could save money on interest and potentially pay off your loan ahead of schedule.

Frequently asked questions about student loan refinancing

Here are the answers to a few commonly asked questions regarding student loan refinancing:

Can you refinance student loans with bad credit?

Yes, several lenders offer student loan refinancing to borrowers with bad credit. Every lender has different credit requirements, so be sure to compare as many lenders as possible to find a loan that suits your needs.

Also keep in mind that while it’s possible to refinance student loans with bad credit, you’ll likely get a higher interest rate compared to the rates offered to borrowers with good credit.

Is there a downside to refinancing student loans?

While refinancing can be a good idea in some cases, it isn’t right for everyone. Here are a couple of potential downsides to student loan refinancing to consider:

  • Loss of federal protections: While it’s possible to refinance federal student loans, doing so will cost you your federal protections, such as access to student loan forgiveness programs and income-driven repayment plans.
  • No repayment flexibility: Unlike federal student loans, private student loans don’t allow borrowers to choose between various repayment options according to their needs. For example, most private lenders don’t offer income-driven repayment plans or graduated repayment plans.

What credit score do you need to refinance?

You’ll generally need good to excellent credit to qualify for refinancing — a good credit score is usually considered to be 700 or higher.

But keep in mind that credit requirements vary between lenders. While some require borrowers to have good credit, others accept lower credit scores. Some lenders don’t have a minimum credit score requirement at all.

How can I get the lowest student loan refinance rate?

Having good to excellent credit can help you qualify for the lowest refinancing rates available — in general, the higher your score, the lower your interest rate. If you want to get approved for better rates, consider spending some time building your credit first or refinancing with a cosigner.

If you decide to refinance your student loans, remember to compare as many lenders as you can to find the right loan for you. Credible makes this easy — you can see your prequalified student loan refinance rates from multiple lenders, all in one place.


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

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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