Refinancing with Laurel Road
Refinancing APRs starting at 1.89%. Checking your rates won’t affect your score.
Choosing to refinance student loans can be one of the smartest ways to optimize your debt repayment. But since refinancing involves borrowing a new loan, you might be wondering if student loans affect your credit score when you refinance.
The simple answer is that refinancing will have minimal impact on your credit — as long as you go about the process the right way. Here’s what you need to know about how to refinance student loans while preserving your credit score.
- Do student loans hurt your credit score when you refinance?
- 3 ways to ensure refinancing doesn’t hurt your score
- When to avoid student loan refinancing
- What’s good for your finances is good for your credit
Refinancing your student loans doesn’t typically cause a great deal of damage to your credit.
When you decide to refinance, your first move will be to shop around for offers from refinancing lenders, whether that’s with banks, credit unions, or online lenders. This shouldn’t affect your credit at all since it only involves a soft credit pull for many lenders.
A hard credit check will only be performed if you find an offer you like and move forward with a full application. This hard inquiry could impact your credit score, but typically only by five points or less.
Of course, if you submit multiple full applications over the course of several months, your credit score could take a bigger hit. That’s why the way you go about applying for refinancing, as well as how you handle your new loan, is a key factor in determining whether refinancing will hurt your credit.
As long as you shop for offers the right way and keep up with student loan payments, refinancing your student loans shouldn’t put your credit score at risk. This move could actually improve your credit, as it could help you pay off your loans faster.
Here are three savvy ways to go about the process.
1. Limit your full applications to a 14 to 30-day window
Refinancing your student loans is a big decision, so you don’t want to go with the first offer you see. Instead, take time to compare your options and find your lowest rate. Many lenders make it easy to pre-qualify for an offer with no impact on your score.
Only a full application will require a hard credit check, so try to submit to limit the ones you submit to your best offers. That way, you can limit the number of inquiries on your credit report.
At the same time, you probably don’t have to be too worried if you’re applying within a certain window. You can usually apply with a few lenders within the same month without harming your credit.
Your FICO score, for instance, won’t be impacted by multiple student loan inquiries if they occur within a 30-day window. Your Vantage credit score has a shorter window at 14 days.
As for which score to prioritize, most lenders look at FICO when evaluating you for a loan. But to be safe and protect both score types, try to get everything done within two weeks so you don’t accidentally incur too many hard credit inquiries and hurt your credit as a result.
2. Continue paying student loans until your student loan refinance is complete
Even though you might be eager to get your refinanced student loan, the process can take time. This is why it’s essential to continue paying off your student loans until your refinanced loan is up and running.
If you stop prematurely, your lenders could report late or missed payments to the credit bureaus, thereby hurting your score. To prevent this from happening, don’t discontinue payments on your student loans until you’re 100% sure the refinancing process is complete.
3. Stay current on your refinanced student loan
Just as you don’t want to miss payments on your old student loans, you also must be careful not to skip or make late payments on your refinanced student loan.
Missing payments on debt is a surefire way to harm your credit score. Late payments can be reported in as little as 30 days and can stay on your credit report for up to seven years.
That’s why you should choose repayment terms that will work for your budget. Even though it might be tempting to choose a short repayment term, don’t do so if you’re worried about your ability to keep up with payments.
Plus, most lenders will let you make extra payments without penalty. So you could always choose a longer term on your refinanced student loan and then, if possible, pay more each month to get out of debt faster.
If you do end up with high bills that are difficult to manage, don’t wait until you can’t make a payment to talk to your new lender. Reach out to it to see if it has a hardship program or any flexibility in repayment.
Some top student loan refinancing lenders offer unemployment protection and even forbearance and deferment options. Be as proactive as you can to make sure your loans don’t go into default.
Remember, student loans are difficult to discharge in bankruptcy, and loan default can have long-term consequences on your credit score. Make sure to stay current on your refinanced student loan so that you can keep chipping away at debt and building your credit score with on-time payments.
While student loan refinancing can be a strategic move for saving money on interest and getting out of debt, it’s not for everyone. If you can’t qualify for a lower interest rate, there might not be much point to refinancing.
Along similar lines, you might decide against this move if you wouldn’t benefit from restructuring your debt with new repayment terms. If you’re not sure how new terms would impact your debt, use our student loan refinancing calculator to compare your old loans with your new offer.
Another reason you might not want to refinance with a private lender is that you’d lose access to federal protections. If you refinance federal student loans, you essentially turn them into private loans. As a result, you’ll no longer be able to apply for federal income-driven repayment plans, forbearance, deferment, or federal forgiveness programs.
As mentioned, some private lenders offer forbearance and deferment options, and some programs award student loan repayment assistance for private student loans. But you won’t have federal options anymore, so make sure you’ve weighed the pros and cons of refinancing before you apply.
It’s way too easy to get hung up on achieving the “perfect” credit score. Don’t let a fear of hurting your credit stop you from taking actions that will improve your financial situation.
If you maintain a positive payment history, have a long history with financial institutions, and keep credit card balances as low as possible, you’ll be able to build a solid credit score.
That good credit score could help you achieve lower interest rates when refinancing student loans. And affordable student loans will help you keep making payments on time every month.
As you think about whether refinancing student loans is worth a potential ding on your credit score, remember this: What’s good for your finances is often what’s good for your credit score.
Shannon Insler and Honey Smith contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|1.89% – 5.90%3||Undergrad & Graduate|
|2.25% – 6.43%4||Undergrad & Graduate|
|1.99% – 8.56%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of January 4, 2021. Information and rates are subject to change without notice.
4 Important Disclosures for SoFi.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/07/2020 student loan refinancing rates range from 1.99% to 8.56% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.