Most students and recent graduates are having difficulty in paying off educational debts and they have no better option than to refinance student loans.
Both private and federal student loan refinance program are now widely available, but some applicants fail to meet the qualifications.
Why?
Here are some of the effective ways to improve your chances in getting approved for a loan refinancing program.
Refinance Student Loans With This Effective Guide
1. Check Your Financial Documents
Lenders assess your eligibility requirements through your financial documents.
Basically, lenders ask for your loan information, payment stubs, and tax returns.
A responsible applicant has gone through a requirement check and is ready before the start of an application process.
This is also important to avoid any delay in the processing or your refinancing application.
2. Employment History
Another essential requirement for some financial institutions is a proof of employment or equivalent, such as a job offer.
Your job employment and history can greatly affect your chances of getting approved.
Lenders look through the stability of your job and some other lenders prefer applicants who work in certain fields.
(Bonus Tip: Need even more tips for paying off student loan debt? Take 10 extra free tips in the Ultimate Student Loan Resource Library. Inside you’ll find 10 extra tips to help you pay off your student loan debt the easiest and smartest way possible. Check it out and learn more here.)
3. Debt-to-Income Ratio
Lenders generally look through income requirements to determine whether you have a stable income and enough money to pay for your monthly obligations.
Lenders also take into consideration your other debts such as mortgages, credit cards, and personal car loans.
The best way to understand your debt status is through DTI ratio.
This ratio pertains to your total monthly income compared with your monthly debt obligations.
The average DTI qualifier is set at 40% and the lower your ratio, the better.
You can improve this ratio by either boosting your income or by reducing your debt obligations.
Also, before applying for a student loan refinancing, try to settle your other debts to improve your chances.
4. Take Good Care of Your Credit
Your credit report plays a very important role in your financial capacity.
Lenders require credit reports to easily assess whether you qualify as a good and reliable debtor.
A credit report consists of credit history, debt balances, and payment histories.
It is needed to qualify for most financial related transactions, like loan and credit card applications, home and auto loans, and even when you are applying to refinance student loans.
You should also be wary of your credit score.
Most lenders require applicants to have at least a credit score of 600.
Paying off your credit card bills on time and improving your loan repayment history are among the most helpful ways to establish a good credit score.
Check out your credit score here for free.
5. Look for a Qualified Co-Signer
Some lenders allow the employment of a co-signer to better qualify for a student loan refinancing.
In fact, having one actually increase your chances of getting lower interest rates when refinancing a student loan.
A co-signer must have an excellent credit rating and be willing to take responsibility in case you fail to settle your debt obligation.
Are you considering to refinance your student loans? Watch this video by CNBC to learn how:
As much as you want a relief for repaying your debt obligations, it is also necessary to consider all your options before applying for a loan refinancing.
If you have decided you need one, consider improving the areas mentioned above for higher chances of getting approved.
(Bonus Tip: Need even more tips for paying off student loan debt? Take 10 extra free tips in the Ultimate Student Loan Resource Library. Inside you’ll find 10 extra tips to help you pay off your student loan debt the easiest and smartest way possible. Check it out and learn more here.)
Do you know of any way to easily get approved when applying to refinance student loans? Share with us in the comments section below.
Up Next: How To Use Student Loan Rehabilitation To Clear A Defaulted Student Loan
Leave a Reply