Student loan debt is one of the largest debts many people will face in their lifetime. However, many have also learned that they can significantly reduce the amount of debt they owe and pay back their loans quicker through student loan financing.
Refinancing your student loans enables you to consolidate any current student loans you have into one loan at a lower interest rate. Before you hire a student loan refinancing company, you need to determine whether or not you will qualify.
As with any loan, lenders carefully and thoroughly review your financial situation and your creditworthiness in order to make a determination as to whether you qualify for refinancing. So the first thing you need to focus on is ensuring you have a good credit score.
Make payments on time and lower your debt if possible. This will help to raise your credit score. Typically, anything above 650 will be okay. However, lenders definitely prefer a score of 700 or higher.
You can also check your credit report to see if there are any errors. Sometimes there are errors or old issues that have since been resolved, but haven’t been removed from the credit report yet. Fixing these errors can raise your credit score.
Being able to show proof of income that is stable and recurring, ensuring you can make your monthly payments, will also help you to qualify for student loan refinancing.
The less other debts you have (credit cards, mortgages, auto loan payments), the better your chances of qualifying for student loan refinancing. The amount of debt you have figures into your debt to income ratio. Too much monthly debt in comparison to your monthly income can be a red flag for many lenders.
If you have a few different debts, such as multiple credit cards, consider consolidating them to make them easier to pay off. These top consolidation companies are reputable and can help you streamline your debts and pay them off faster.
If you are still worried you might not meet the criteria to qualify for student loan refinancing, you can always seek a qualified co-signer. This can be a relative, a spouse, or even a close friend. And, with student loan refinancing, there is often little risk to the co-signer because many lenders offer a co-signer release that releases them of financial responsibility if certain qualifications are met.
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