Wanting to make student loan payments more manageable is an understandable and wise goal. Although lenders may vary in their credit score requirements when approving a student loan refinance, generally, you need a minimum credit score in the mid-600s. 

The higher your credit score is, the easier it will be to qualify. You’ll receive more favorable interest terms, which can save you money and make it easier to pay down your debt faster. 

However, you can still find options to refinance a personal loan if you have bad credit and potentially get a more favorable rate. If your score is too low to qualify on your own, adding a cosigner to your application can help. 

It’s always a good idea to compare different lenders when looking for a loan, if you have bad credit so you can see who can offer you the best interest rates and terms. Your lender needs to know how much you have remaining on your current student loans, so make sure you know how much you need to borrow and gather the documentation necessary to prove that.

Credit is an important factor when applying for a loan, but lenders do take other factors into consideration, such as your debt-to-income ratio (DTI). Your DTI compares how much debt you have to your gross income. If you can pay down other sources of debt, your ratio is lowered and lenders can feel more confident that you can afford your loan payments. 

You can also apply with a cosigner (like a parent) if you’re struggling to qualify on your own.

Related: Learn more about refinancing your student loans on Credible.com

All lenders have their own unique set of lending requirements that applicants need to meet when refinancing student loans.

Again, typically, along with minimum credit score and DTI metrics, they have income requirements to ensure you make enough money to afford your loan payments. This all helps reflect your financial commitments to a lender. To that point, some lenders may have stricter requirements to further prove your commitment.

Lenders care about credit scores because they help them learn more about how much risk a borrower poses when it comes to paying off loans. You’re more likely to be approved if you have a high credit score, strong credit history, and make on-time payments for your student loans. 

Let’s take a closer look at why credit scores matter when refinancing and what other factors lenders look at. 

When you refinance with a private lender, it typically performs a credit check after you apply. If you don’t have a good enough score to qualify for a new loan, then you can try to apply with a cosigner who has a better credit score and possibly stronger credit history. By applying with a cosigner, the lender can have some extra peace of mind that payments are more likely to be made. 

The more debt you have, the higher your DTI will be and this can signal to a lender that you have too many debt payments to handle making payments on a new form of debt. One quick way to reduce your DTI is to pay off your credit card balances. 

Your employment history doesn’t affect your credit score, but it does help lenders verify your identity. Lenders also like to see proof of current employment and a federal W-2 form for the most-recent tax year to confirm you’re currently employed and making enough to afford your loan payments.

Refinancing student loans involves having a lender pay off an existing student loan or multiple.In exchange, they issue you a new loan. Ideally, this new loan will come with a lower interest rate than you had before, which can help you save money on interest payments. If you have multiple loans, combining them into one new loan can make your repayment process more streamlined.

If you have bad credit, you can take the following steps to improve your odds of qualifying for refinancing. 

Pay down debt, and review your credit report to see if any errors you have can be removed. Make it a point to pay all of your debt payments on time so you can make progress on improving your credit score. 

You can also lower your DTI by paying down your debt, which will make you a more attractive borrower.

Take your time getting quotes from a few different lenders. You can shop around with a handful of lenders to see who will offer you the best interest rates, who charges the least fees, and who can offer you a monthly payment that works for your budget. Some lenders may specifically work with borrowers with bad credit.

Applying with a cosigner who has a better credit score than you can help strengthen your application. But before applying, make sure your cosigner is aware of what their responsibilities will be and how cosigning can impact their credit. If you can’t make your loan payments, your cosigner will be responsible for doing so and their credit will be impacted, leading to a possible strain on your relationship.

Some pros associated with refinancing private student loans include a potentially lower interest rate and monthly payment, and you don’t usually have to worry about origination, prepayment, or application fees.

The main disadvantage of refinancing private student loans is that if you don’t have a high enough credit score to qualify for a better interest rate, refinancing is often not worthwhile.

Refinancing federal student loans can have the same advantages as refinancing private loans (a potentially better interest rate and monthly payment), but refinancing federal student loans comes with some unique disadvantages. 

When you refinance federal student loans you lose access to valuable federal protections like income-driven repayment plans, forgiveness programs, and repayment grace periods. This is because refinancing a federal loan turns it into a private loan.

If you have multiple federal student loans and don’t want to refinance — but want the convenience of one monthly payment — you can consolidate your debt into one federal Direct Consolidation Loan. This can simplify the repayment process but also allow you to maintain access to federal student loan benefits.

If you decide refinancing isn’t the right fit for you, these are some alternatives that can help you pay off your student loans faster and save on interest, even if you have bad credit. 

Consolidation is similar to refinancing, but only happens with federal student loans. You can combine multiple federal student loans into one (using a federal Direct Consolidation Loan) to create a single monthly payment. Your new interest rate will be the average of the rates of all the loans you consolidated, but you end up with one convenient loan to focus on repaying in an easier debt repayment plan. 

Income-driven repayment plans can help you stay on top of loan payments even if your income decreases. If you have federal student loans, some federal repayment plans base what your payment is on your current income.

Related: Learn more about refinancing your student loans on Credible.com