You Need to Know This Things About Credit and Student Loan Refinancing
1. Your credit rating is only one of the factors for obtaining approval for refinancing.
Good, good, you understand. Your credit rating is important. But this is not the only factor that lenders take into account when approving borrowers for refinancing. Many lenders also pay attention to income, employment history and savings.
Therefore, although it is important to have a good credit rating for refinancing, it is also important to maintain a positive cash flow and employment status. Good or bad, your credit rating is only one aspect of your eligibility.
2. Find out your estimated interest rate without affecting your credit rating.
You can save money by refinancing, but how do you know how much you really save until you know your potential interest rate? Good news: Some lenders, such as SoFi and Earnest, allow you to check your potential level without affecting your credit rating.
This is usually called “soft” lending, which does not harm your credit. Therefore, as soon as you check your interest rate, you can make an informed decision to move forward (or not) as long as your credit rating remains unchanged.
3. Refinancing may affect your credit rating.
Once you decide to apply for refinancing, you will have a heavy load on your loan. Heavy blows temporarily knock your credit rating by several points.
In addition, refinancing means that your old loans will be repaid, which will lead to a closed account and potentially a higher utilization rate if you have other debts. However, your account is unlikely to fall sharply, and the benefits of significant savings may well outweigh the costs.
Your credit rating plays an important role in the refinancing process. Keep track of your payments, keep a low balance and periodically check your credit ratings and reports. This can help you get approval for financial opportunities such as refinancing, which ultimately helps you save money.
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