Having good credit can give you access to more financial products at more favorable rates. This includes private student loans, for those going to school, and private loans for refinancing student loans after you graduate. In either case, good credit can lead to lower monthly payments and paying less interest overall.
And while, for example, a FICO score above 670 is often seen as good, a lot depends on what you need that score for. Here are some questions to consider as you evaluate your credit score:
- What is considered a good credit score?
- Student loans and your credit score: Why does it matter?
- How is your credit score determined?
- How do those student loans affect your credit score?
- How do you check — and improve — your credit score?
What’s considered a good credit score will vary depending on the lender and type of loan. However, in general, a score in the high 600s will put you in the “good” range. Once your scores are in the high 700s or 800s, you may be in the very good or excellent ranges — giving you an even bigger advantage.
Credit score ranges
Different types of credit scores can have different credit score ranges. However, the most recently released and commonly used generic scores (meaning, a score that many types of lenders can use) from FICO and VantageScore range from 300 to 850.
FICO also creates industry-specific credit scores for auto lenders and bank card issuers that have a 250 to 900 range. In either case, a higher score indicates that a person is less likely to miss a payment in the next two years, which is why it’s a better score.
Having a credit score within a certain range could put you in a bad, good or excellent category. Lenders and creditors can set their own definitions for what they consider good or bad, but there are some general ranges that can serve as guidelines:
- Bad credit: 300 to 579
- Fair credit: 580 to 669
- Good credit: 670 to 739
- Very good credit: 740 to 799
- Excellent credit: Over 800
For these generic scores, the best credit score you can have is an 850. However, you don’t necessarily need the highest score to get all the benefits. Creditors may start to give you their best rates and offers once you’re in the very good or excellent ranges.
Your credit scores can impact your student loan options when you’re applying for student loans, and your refinancing options when you’re repaying student loans.
Most students should start their search for student loans with federal student loans. With federal loans, there’s no income or credit score requirements, which can make it easier to get approved for a loan. You’ll also receive the same interest rate and loan amount regardless of your credit.
However, students who don’t qualify for federal student loans or need to borrow additional money may turn to private student loans. Private lenders will check your credit, and having good credit can help you qualify for a larger loan amount and lower interest rate.
After you leave school, having good credit can be important if you want to refinance your student loans. Refinancing can help save you money by letting you replace your current loans with a new, lower-rate loan. However, you may need good credit to qualify for a new loan at a low rate.
Credit scoring models are programs that analyze one of your credit reports from Equifax, Experian or TransUnion. These major consumer credit bureaus collect and store information about your financial history and public records, such as your history with credit cards, loans and whether you’ve declared bankruptcy.
Scoring models analyze this information to try and determine the likelihood that you’ll miss a payment on a credit account in the future. Each model may weigh information differently, and your credit reports can vary from one bureau to the next. As a result, you may receive a different score depending on when you check your credit, which scoring model is being used and which credit report the model analyzes.
The good news — many credit scoring models use similar factors to determine your score:
- Payment history: Whether you’ve previously paid bills on time or had late payments, defaults, collections or filed for bankruptcy can have a significant impact on your credit.
- Revolving account usage: Only using a small portion of your available credit on revolving accounts (such as credit cards) is best. The amount you use compared to your available credit is called your credit utilization ratio.
- Experience with different accounts: Having a mix of installment and revolving accounts (both open and closed) in your credit history can be good for your scores.
- Length of credit history: A long credit history, and high average age of accounts, could also be good for your scores. Both open and closed accounts count toward these metrics as long as they’re on your credit report.
- Recent activity: Recent inquiries can be a minor factor, and a new hard inquiry may hurt your score a little. The impact is often minimal, and you should still apply for credit when you need it.
Because the credit scoring factors are similar across multiple scoring models, the activities that may improve one of your scores can help increase all your scores.
Student loans are installment loans and can impact your credit scores in similar ways to an auto loan or mortgage. Applying for a private student loan may lead to a hard inquiry, which could hurt your scores. (Most federal student loans don’t require a credit check, so there won’t be an inquiry.)
Having the account in your credit history may help your scores, and making on-time payments can help you build a long, positive credit history. Missing a payment, or paying 30 or more days late, can lead to negative marks in your credit history, which can hurt your scores.
If you’re having trouble affording your student loan payments, you may want to look for alternative payment plans, forbearance or deferment. If your servicer offers one of these options you may be able to pay a lower amount or temporarily pause payments without hurting your credit.
You can check some of your credit scores for free by creating accounts with different financial information websites, lenders, credit card issuers or the credit bureaus. The scoring model and underlying credit report can vary depending on where you get your score. But remember, many credit scores tend to trend in the same direction.
No matter which score you’re focused on, a few basic actions can help improve your credit:
- Make payments on time: Making on time payments, even if it’s only for the minimum amount due, is one of the best things you can do to improve your credit over time.
- Pay down credit card debt: Lowering your utilization rate by paying down credit card debt can help you quickly improve your scores. This can even happen if you use an installment loan to pay off credit cards.
- Keep an open account: If you’re not repaying a loan and don’t have any credit cards, you may want to open a credit card that doesn’t have an annual fee. Having recent activity on your credit report can ensure you’ll stay scorable.
- Review your credit reports for error: If there are negative marks that are hurting your credit, but aren’t entirely accurate, you can file a dispute with the credit bureaus to get the error corrected.
Shannon Insler contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.99% – 6.59%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|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 June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.48% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance 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 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 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 April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.49% APR to 6.94% APR (with autopay). Variable rates from 1.99% APR to 6.59% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 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 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.