If you feel that your credit score doesn’t tell your whole financial story, you’re not alone.
Many people feel frustrated by their inability to get good loan refinancing rates based solely on their credit score. The people at Earnest understand that.
Their goal is to help you get a good rate to refinance your student loan even if your credit score is less than perfect.
What is Earnest?
Earnest is a private lender that can help you refinance your student loans by offering lower-than-average rates and repayment flexibility.
Earnest refinances loans ranging from $5,000 to $500,000. You can apply for loan refinancing as early as six months before graduation through
Earnest if you have a job offer or consistent income. While Earnest does have strict underwriting criteria, they account for more than just your credit score.
This is ideal for borrowers who have good financial habits but may not have an established credit score yet.
Earnest incorporates your savings, earning potential, spending habits, and personal debt to determine your eligibility.
Users are also able to set their own monthly payment amount. Earnest also allows you to increase monthly payments, make multiple extra payments, and make same-day payments without penalty.
This can all help you pay off your student loan more quickly.
Who is the Ideal Earnest User?
Earnest is a fantastic refinancing option for students or parents with a good enough financial standing to qualify for a loan without a cosigner.
Individuals with credit scores of 650 or higher will have no problem qualifying for loan refinancing through Eligible.
If your credit score is below this, you will need to otherwise prove that you have good financial habits.
You will likely qualify for a loan if you have at least two months of income saved, are current on rent payments, and spend less than you make.
If you are carrying too much personal debt, you may not qualify for loan refinancing.
Private Student Loans
Earnest began offering private student loans earlier this year.
It is a good option for those who need additional assistance outside of their federal loans.
Although Earnest does not allow loan refinancing applicants to apply with a cosigner, those applying for a private loan may apply with a cosigner.
Should I Refinance My Student Loan Through Earnest?
It is always important to consider the advantages and disadvantages of a loan refinancing company before closing on an offer.
Below are some points to consider before closing a loan through Earnest.
Pros of Earnest
Personalized Monthly Payments
This perhaps one of the most unique aspects of Earnest. Known as their “precision pricing” model, this feature allows you to set what you would like your monthly payment to be and adjusts the loan term accordingly.
The loan term can be anywhere from five to 20 years.
Many other student loan lenders have set terms regarding repayment. Earnest’s precision pricing allows for unique loan periods that could help you meet your ideal monthly payments.
Skip one Payment Every 12 Months
If you make at least six months of consecutive payments on time, Earnest will give you the option of skipping a payment on your loan every 12 months. It is worth noting that the payment isn’t simply forgiven.
Instead, Earnest will spread out that payment over the remainder of your term and adjust your interest rate accordingly. The maturity date on your loan will also be extended.
It isn’t advised that you take advantage of this at every opportunity, but it can certainly help if money becomes tight at some point over the course of your loan.
Competitive Rates
Among its competitors, Earnest offers some of the lowest APRs around. Fixed rates begin at 2.49% APR, while variable rates start at 3.5%.
No Additional Fees
Earnest does not charge any late fees, prepayment penalties, origination fees, or application fees. This means that all payments will go towards paying off the remainder of your loan.
Services Loans In-house
One of the benefits of refinancing through Earnest is that they service all of their loans. Many loan refinancing companies will consolidate your loan and then sell that loan to another company.
This can mean a toss-up in regards to the service you receive on the loan.
With Earnest, you never have to worry that your loan will be serviced by a third party.
Cons of Earnest
No Cosigner
One of the most notable downsides of Earnest is that they do not allow borrowers to apply with a cosigner. This can be a problem for borrowers with below-average credit scores or unestablished credit.
Not Available in Every State
Unfortunately, Earnest loans are not available to borrowers in every state. They do not offer loan refinancing in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.
Variable rates are not available to borrowers in Alaska, Illinois, Minnesota, New Hampshire, Ohio, Tennessee, and Texas.
Navient Ownership
It is worth noting that Earnest is owned by Navient. Navient is a student loan servicer that has been the target of several lawsuits regarding questionable servicing practices.
Earnest is run as a separate unit within Navient and continues to service their own loans.
It remains unclear the role that Navient plays in servicing loans taken out through Earnest.
How Do I Get Started With Earnest?
In order to get a rate, Earnest will perform a credit check. Earnest claims that their credit approval takes only two minutes, but there are some caveats to this.
Because Earnest takes a big-picture approach when it comes to your finances, this means verifying a lot more information than just your FICO score.
In order for Earnest to get a sense of your finances as a whole, this means lots of paperwork and information to verify.
Frustrating as it is, this could mean that you can get a lower rate than you otherwise would through another private lender.
What about Loan Deference or Forbearance?
In terms of deferment after graduation, Earnest will continue any grace period from your previous lender for up to nine months.
Earnest also allows borrowers to defer their student loans for up to 36 months if they are in pursuing a graduate degree, in the Peace Corps, or in the military.
Interest will continue to accrue during this deferment period.
Borrowers can apply for forbearance if they are experiencing economic hardship, such as unemployment or excessive debt burden. Voluntary resignation does not qualify as terms for unemployment and will likely be rejected as a reason for forbearance.
They will allow borrowers to put their loan into forbearance for up to 12 months. Earnest typically requires that borrowers make at least three months of loan payments before applying for forbearance
Like loan deferment, a forbearance period will continue to accrue interest. Any forbearance period will also be reported with credit agencies but likely will not affect your credit score.
Should You Choose Earnest?
Earnest is the only lender to offer low rates to people with average credit scores because of their expanded definition of financial well-being. This is wonderful news for people with credit scores in the mid-600s, but may not be the best option for those credit scores above 700.
Earnest certainly doesn’t offer the lowest rates on the market, which is why it is always wise to shop around before deciding on a company to refinance your loan. There are several tools to help you do this, such as Credible. Be sure to consider all options to ensure you are getting the best rate for your loan.