April 1, 2023
Are you looking for a way to reduce your student loan debt? Student loan refinancing may be the answer you’re looking for. Refinancing your student loans can help lower your monthly payments and save you thousands of dollars in interest charges. However, if you’re planning to buy a home or car this year, it’s important to know how the refinancing process can affect your credit score.
Here are three ways refinancing could impact your credit:
1. Hard Credit Pulls
When you’re looking for student loan refinancing options, you may be tempted to apply to multiple lenders to compare interest rates and repayment terms. However, each time you apply for a loan, the lender will perform a hard credit inquiry, which can temporarily lower your credit score. To avoid this, limit your loan applications to a 14 to 30-day window. LendKey’s check your rate feature uses a soft credit inquiry, allowing you to explore refinancing options without affecting your credit score.
2. Missed Payments
It’s important to continue making payments on your current student loans until your new loan pays them off. Missing payments can negatively impact your credit score. Work closely with your lender to know when to stop making payments on your current loans and start making payments on the new one.
3. Late Payments
Even after refinancing, it’s essential to make payments on time. Late payments can harm your credit score, and the information can remain on your credit report for up to seven years. Signing up for automatic payments or setting payment reminders are a couple of ways to avoid being late. If you have trouble making payments, contact your lender or servicer immediately to explore what forbearance and financial hardship programs they offer.
Wrapping it up…
By following these tips, you can enjoy the benefits of a lower interest rate and reduced monthly payments without negatively impacting your credit score. Ready to explore your refinancing options? Provide LendKey with a few details to quickly check your rate without affecting your credit score.
Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.
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