Student Loan Refinance | Wright-Patt Credit Union (2024)

FAQs

Is it hard to get approved for student loan refinance? ›

Not everyone can qualify to refinance student loans. You typically need a college degree, good credit and an income that lets you comfortably afford your expenses and debt payments. If you meet these requirements, consider refinancing in these circ*mstances: The savings will make a difference.

Payment and Credit History

Credit isn't the only factor in whether you get approved or denied. The lender will also pay special attention to your payment and credit history. If you've missed several payments in the past or made a late payment, student loan refinance lenders are more likely to reject your application.

CNBC Select outlines the requirements. Borrowers who want to refinance student loans will likely need good or excellent credit to qualify. According to Experian, one of the three main credit bureaus, 670 is generally the base credit score that lenders require to be eligible for student loan refinancing.

Refinancing student loans through a credit union is similar to refinancing with a bank or online lender with a few differences. But the type of lender you choose is less important than finding the best possible rate and features you're seeking.

Here are some reasons to avoid a student loan refinance: You don't qualify for a lower interest rate. The main benefit of refinancing is lowering your student loan interest rate. If you don't see or qualify for a better rate, it's best to stick with your current lender.

Not all homeowners are approved for refinancing, though. With home prices and interest rates still high, lenders are careful about who they approve. The rejection rate on mortgage refinance applications increased to 15.5% in 2023 from 9.9% in 2022, according to the Federal Reserve Bank of New York.

Key Takeaways. Don't refinance if you have a long break-even period—the number of months to reach the point when you start saving. Refinancing to lower your monthly payment is great unless you're spending more money in the long-run.

Your credit score gauges how likely you are to repay a loan and is usually measured on a scale from 300 to 850. To be approved for a conventional mortgage, you typically need a minimum 620 credit score. If your score is below the mid-600s, however, you may have a harder time qualifying for a refinance.

While having a co-signer does not guarantee you will be approved, if they have a high credit score and good credit history, lenders are far more likely to trust you as a borrower.

If you have bad credit, you may be motivated to refinance your student loans to lower monthly payments. However, many lenders require a minimum credit score in the mid-to-high 600s. You will likely need a cosigner on the loan application to qualify.

What student loan can I get with a 600 credit score? ›

If you have poor or fair credit—typically a credit score below 670 using the FICO scoring model—prioritize taking out federal student loans, which don't require a credit check. They also offer the most flexible repayment terms, including forgiveness if you work in public service or choose certain repayment plans.

Key takeaways. You'll need a credit score of at least 620 for a conventional refinance. Credit score minimums for other types of refinances range from 580 to 700 or higher.

Because credit unions are “non-profit” credit unions tend to have lower mortgage interest rates and fewer lender fees. So, if you're shopping for a lender and comparing banks and mortgage brokers, don't forget to see what credit unions have to offer. We think you'll be pleasantly surprised.

If you refinance your federal loan with a new private student loan, you will no longer be eligible to participate in these federal loan forgiveness programs. You may also lose the protection of loan discharge or forgiveness in the case of death or permanent disability, which you get with federal student loans.

You can refinance student loans, but only with a private lender. You can't refinance student loans through the federal government. To keep federal benefits, you can consolidate federal student loans. But federal consolidation won't lower your interest rate or save you money.

In general, you'll need to have a credit score in the mid- to high 600s, a debt-to-income ratio of less than 43 percent and a source of steady income to refinance a student loan, but the requirements vary by lender. Getting pre-qualified is an excellent way to see if you're eligible for student loan refinancing.

A good credit score — often defined as a FICO score 670 or higher — indicates that you've done a good job managing debt and are likely to repay your loan. As a result, in general, the higher your credit score, the better your approval odds and chances of qualifying for a lower rate.

You'll typically need good to excellent credit to qualify — a good credit score is usually considered to be 700 or higher. If you have poor or fair credit (or even no credit), you might need to apply with a creditworthy cosigner to increase your approval odds.