If you believe the monthly payment or interest rate on your student loan is too high, it may be time to refinance.
Refinancing a loan can help reduce your monthly payments and your overall loan amount by lowering the interest rate on your loan.
Credible is a tool that compares federal and private loan providers to help you refinance your student loan.
In about two minutes, Credible connects you with several lenders who can help you manage your loan at the lowest interest rate.
With just a little bit of time, Credible can help save you a lot of money!
What is Credible?
Credible is an online marketplace that helps you get prequalified rates to refinance your student loan.
They are not a direct lender but rather help connect you with lenders who can offer you a lower interest rate than your current loan provider.
Credible offers competitive APR’s and represents over 100 different private lenders.
They do not charge fees or impact your credit score. When you close a loan through Credible, they are paid by the lender at that point.
Those concerned about Credible’ s legitimacy need not worry.
They are a BBB-accredited business with an A+ rating and have exceptional ratings across a variety of rating platforms.
What Are The Qualifications To Use Credible?
It is important to understand that Credible does not provide a loan.
It simply acts as a matching platform to help you find a company to refinance your loan through. For this reason, there are no qualifications to use Credible.
However, if you decide you would like to refinance your loan through one of the companies partnered with Credible, you must meet the following requirements:
- Must have $5,000 or more in student loan debt from a qualifying US educational program
- 18+ years old
- US citizen or Permanent Resident
If you do not meet the above requirements, you can still apply if you have a cosigner who meets the requirements.
Should You Use Credible to Refinance Your Loan?
There are many advantages to using Credible to find a loan provider, but there are also some drawbacks.
Below are some of the pros and cons of refinancing your loan through Credible:
Pros
- No Origination Fee: Many loan providers charge what is known as an origination fee. An origination fee is typically charged by a lender to cover the cost of processing a loan. None of the lenders that offer refinancing through Credible charge an origination fee, which is another way to help minimize the cost of refinancing your loan.
- Multiple Offers: One of the most frustrating parts of applying for a loan is the tediousness of the process. From filling out multiple applications to researching quality lenders, you can start to feel bogged down and discouraged. Credible simplifies this process by only making you fill out one form that yields prequalified rates from dozens of loan providers.
- Does Not Impact Your Credit Score: Comparing loan offers through Credible will not impact your credit score. Because Credible only facilitates matching between lenders and borrowers, they do not need to run a real credit check. Once you decide on a company to refinance your loan through, you will complete the application process on that company’s site.
- Cosigners Allowed: Though it may seem obvious, you will receive better interest rates if you have a stable income and a credit score in the mid-600’s or higher. If you are worried about your credit score, Credible allows you to have a cosigner to apply for loan refinancing.
Cons
- Loss of Federal Benefits: Federal loans offer certain benefits that may not carry over with a private loan provider, such as income-based repayment plans and unemployment protection. If you switch from a federal to a private lender, you could lose these benefits. Be sure to check what benefits are offered with any loan provider before making a final decision.
- Prequalified Rates are not Binding: It is important to note that a prequalified rate is not a true offer. It is simply the best estimate based on the initial information you provided. If your credit profile changes from the time you check through Credible to when you actually apply, you may have a higher interest rate than initially estimated.
- Limited Options: It cannot be understated how beneficial it is to have your information fed to multiple lenders at once to get rates. However, Credible does not represent every loan refinancing company out there. While Credible is an excellent tool, it is advised that you do some research on other student loan providers that are not represented on the Credible platform.
How Does Student Loan Refinancing Work?
When you refinance your loan, you are taking out another loan to pay off your old loan.
Your new loan would ideally have a lower interest rate or longer repayment period to help make monthly payments more manageable.
Refinancing a loan sounds complicated, but it can save you a lot of money.
Why Should I Refinance?
There are a few situations in which it makes sense to refinance your student loans.
Lower Your Current Interest Rate
The most common reason to refinance your student loan is if you would like to lower your current interest rate on your loan.
Refinancing your loan can also help if you are making payments on a federal loan repayment plan and would like to repay your loan more quickly.
It is typically not advised to refinance federal loans as you can lose some key benefits that may not be included with a private lender.
However, there are some benefits to refinancing through a private lender. Government student loan programs are required to offer every applicant a loan.
This is good for people with bad credit, but people with good credit are actually at a disadvantage.
Private lenders are able to offer better rates by only offering loans to applicants with good credit.
In terms of refinancing a loan, this means you could dramatically lower your interest rate.
How Do I Refinance My Student Loan Through Credible?
Credible is an incredibly simple platform to use and it only takes about two minutes to find prequalified rates.
Enter Your Information
The first step is to enter your information. The information that is needed to get prequalified offers through Credible is your personal and contact information, information about your former school, and how much you are looking to refinance.
They will also perform a soft credit check, which will not affect your credit score.
Review PreQualified Rates
After you enter your information, Credible will provide you with prequalified rates from various venders.
Note that these are rates you may qualify for based on the information you entered but are not a final offer. Based on these rates, you can decide if it makes sense to refinance and select the offer you feel is the best option.
Apply With The Lender
Once you decide on a loan offer, it is time to apply for the loan. Credible will direct you to that company’s site and you will finish the application process there.
The lender will ask you for more in-depth questions about your finances and run a real credit check.
Once you close your loan, all payment will be processed through the company through which you financed. Payment options will vary from lender to lender.
Many loan providers offer autopay to help you avoid late fees.
Final Thoughts
Credible is an easy to use platform that can help you decide whether or not it is in your best interest to refinance your student loan.
It is an important tool in the overall process of finding the best loan provider for you.