For many Americans, the high cost of student loans can delay plans of buying a home, saving for emergencies or putting money toward retirement. Refinancing your student loans is one way to ease that burden, but borrowers with little financial history may find that route challenging.

Private lenders check your credit score when you apply for refinancing, and many require a credit score of at least 650 to qualify. If you think your credit score could hold you back, here’s what to know.

The lowest credit scores accepted for student loan refinancing

Since refinancing comes from private lenders, every loan servicer has unique credit requirements. Your credit score is one metric of how reliable a borrower you may be, and lenders may use your score in determining whether you qualify for student loan refinancing and at what rate.

Credit scores range from 300 (poor) to 850 (exceptional). The longer and more dependable your track record as a borrower has been, the more likely you are to qualify for more credit – or, in this case, refinancing.

The higher your credit score is, the more likely you are to see competitive interest rates. Lenders generally want to see credit scores in the upper 600s to qualify for refinancing student loans. For instance, Earnest requires a credit score of at least 680.

Your credit score is one essential factor in determining your eligibility, but it’s not the only factor. Some lenders don’t advertise minimum credit score requirements because of other considerations, like your income and how long you’ve been making payments on your current loans. Some lenders may even consider your college field of study and profession when assessing your application to refinance student loans.

How to determine if refinancing is worth it if you have bad credit

Although refinancing your loan may be worth it if you can save money, it’s not right for everyone. Below are some situations where it may make sense — or not — to refinance your student loans with bad credit.

When refinancing your student loan may be a smart idea

Refinancing with bad credit could make sense in these scenarios.

  • You can qualify for a lower rate. If your credit has improved since you first applied and you can qualify for a lower rate, refinancing can still save you a ton of money.
  • You’re having trouble juggling many loans. Consolidating your loans into one monthly payment may help you better manage student loan repayment.

When refinancing your student loan might not make sense

Refinancing might not be worth it in these situations.

  • You have federal student loans. You should always think twice about refinancing federal student loans because they come with benefits that private loans don’t have, such as access to income-driven repayment plans and student loan forgiveness programs.
  • Average interest rates have increased. If student loan rates have increased since you took out your loan and you can’t find a lower rate, it’s probably better to keep your existing loan until you come across a lender with a more competitive offer.

Other requirements to refinance a student loan

When you apply for student loan refinancing, lenders typically consider these factors in addition to your credit profile.

  • Income. Most lenders require you to share financial information, such as pay stubs and W-2s, to assess whether you can afford to repay the loan.
  • Debt-to-income ratio (DTI). Your DTI measures how much monthly debt you have relative to your gross monthly income. Although the DTI requirement varies by lender, the lower your DTI, the better your approval odds.
  • Co-signer. If you don’t meet a lender’s requirements, some may allow you to add a co-signer who does to boost your chances of qualifying.

How to refinance student loans with a bad credit score

If you have bad credit, you aren’t entirely out of luck when refinancing. Some lenders look at more than your credit score when you apply. For example, Earnest claims that in addition to the minimum credit score requirement, it considers your savings, education and earning potential to make approval decisions. Applying with a lender with broad eligibility criteria could help you get approved or get a lower rate.

Getting someone to co-sign your loan is also an option, especially if your credit score is below 650. When you add a co-signer, their credit and income is taken into account for approval and rate decisions; for many people, a co-signer is the only way to get approved for refinancing with a bad credit score.

Student loan refinancing alternatives

Refinancing might be a great next step for you if you have stellar credit and can qualify for an interest rate lower than what you’re currently paying. But it’s not the right move for everyone. If you don’t qualify for student loan refinancing or want to explore other options for managing your student loan repayment, consider these:

  • Income-driven repayment plans: If you have federal student loans, you can explore IDR Plans. These base your payments on your income and household size. After 20 or 25 years, the remaining balance on your loans is forgiven. Your credit score doesn’t determine your eligibility for these plans, like student loan refinancing.
  • Consolidation: If you want to move all your federal loans into one manageable payment, you can apply for a Direct Consolidation Loan. Your interest rate is rounded up to the nearest one-eighth percent, so you won’t get a lower interest rate like you might through refinancing. But you also won’t lose the federal protections — like deferment and forbearance — that come with having federal student loans.
  • Forbearance: Forbearance is when you temporarily pause student loan payments without impacting your credit score. The federal government and some private lenders offer this option. Before applying, you can check with your lender to see if you’re eligible for forbearance.

The bottom line

The credit score you need to refinance your student loan varies by lender but is often 680 or higher. The higher your credit score, the better your chances of qualifying for a loan with a lower rate. In addition to your credit score, lenders consider other factors, like your DTI and repayment term. If you’re having trouble qualifying for a lower rate, adding a co-signer with better credit can help.

Before you refinance federal student loans, understand that doing so means giving up benefits, like access to federal forbearance and student loan forgiveness programs. If you plan to use those benefits, consider student loan consolidation instead.

Frequently asked questions

  • Although your credit score is an important factor, it’s not the only thing student loan refinancing lenders consider when calculating your rate. They generally consider other factors, such as:Debt-to-income (DTI) ratio: Your DTI is how much monthly debt you have compared to your monthly income. The lower your DTI, the better your chances of qualifying for a new loan with a lower rate.Repayment term: Some lenders may charge you a higher rate if you take out a student loan with a long-term versus a shorter one.Co-signer: When you apply for student loan refinancing with a co-signer, a lender will consider their credit score and financial situation. If they have good credit, it may help you secure a lower rate.
  • Beyond determining your chances of getting approved for a refinance loan, your credit score also impacts the cost of that loan. If you have a credit score of 650, you may be approved — but you’ll also likely face the highest interest rates the lender offers.If you have good credit, you can secure a lower rate that reduces both your loan’s monthly payment and the overall cost of the loan.In general, lenders see credit scores of 740 or higher as very good and those over 800 exceptional. You can often qualify for the best rates if you have very good credit. However, credit scores aren’t everything. You’ll also need a solid income and a good debt-to-income ratio.
  • It’s possible to refinance student loans with a lower credit score. However, a score below 620 could make qualifying for refinancing challenging unless you get a co-signer who meets the lender’s eligibility guidelines. You’ll also need to shop around to find a lender that’s willing to work with you.
  • The most important step you can take to strengthen your credit profile is paying all of your bills on time — your payment history accounts for around 35 percent of your FICO score.Other steps include paying down debt, especially credit card debt, and monitoring your credit reports for errors by visiting AnnualCreditReport.com.