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Student Loan Refinancing

Income, Credit Score, and Credit History: Which is Keeping You From Refinancing?

August 3, 2020

If your goal is to become debt-free as quickly as possible, student loan refinancing can be a powerful tool for managing your loans. ELFI customers reported that they save an average of $272 per month, and should see an average of $13,940 in total savings after refinancing their loans with Education Loan Finance.1

 

By Kat Tretina

 

Unfortunately, not everyone qualifies for refinancing the first time they apply. When you submit your loan application, refinancing lenders look at your income, credit score, and credit history to determine whether to issue you a loan. If you don’t meet their requirements in just one area, the lenders will deny your application. 

 

If you aren’t quite eligible for refinancing quite yet, here’s what you can do to improve your application so you can get approved in a few months — and qualify for a lower interest rate.

 

Student Loan Refinancing Requirements

Borrower requirements can vary from lender to lender, and some lenders are very vague about their refinancing criteria. However, ELFI is different and has transparent eligibility guidelines. 

 

To qualify for student loan refinancing with ELFI, you must meet the following student loan refinancing* requirements:

    • You must be a U.S. citizen or permanent resident
    • You must be the age of majority or older 
    • You must have at least $15,000 in student loans to refinance
    • You must have a bachelor’s degree or higher
    • You must have a minimum income of $35,000
    • You must have a minimum credit score of 680
    • You must have a minimum credit history of 36 months
    • Your degree must come from an approved post-secondary institution and program of study

 

Tips for Improving Credit Score

ELFI’s minimum credit score for refinancing applicants is 680. If your score is less than that, you’re not alone. According to Experian, about 33% of Americans have a credit score under 670. However, that doesn’t mean you’re stuck with a poor credit score. By making some changes, you can boost your credit. 

 

To improve your score, use these tips: 

 

  • Make all of your monthly payments on time: Your payment history makes up 35% of your credit score. To raise your credit, pay all of your bills and minimum loan payments on time. When possible, sign up for automatic payments to minimize the risk of missing payments. 
  • Sign up for Experian Boost: Experian Boost is a free service you can use to get credit for your cell phone and utility payments. On average, users who sign up improve their credit scores by 13 points. 
  • Keep your credit card balances low: Your credit utilization — or how much of your available debt you use — accounts for 30% of your credit score. Pay down existing debt and use your credit cards sparingly to bring up your score. 
  • Don’t open new credit accounts: Every time you open up new accounts, your credit score will drop. New credit makes up 10% of your credit score, so only open up a new account when you really need it. 
  • Review your credit report and dispute errors: Review your credit report for free at AnnualCreditReport.com and look for errors, such as fraudulent accounts opened under your name. If you see any issues, dispute them with the credit bureaus and have them removed from your credit report. 

 

 

How to Increase Income

If you’re a recent college graduate, your income may be less than the minimum required for student loan refinancing. To boost your earnings, consider these strategies: 

 

  • Ask for a raise: If you’ve been at your job for over a year or more and have done good work and received positive feedback, it may be time to ask for a raise. The average raise is 3.3%, which could give you the additional income you need to qualify for a loan. 
  • Learn new skills: If a raise isn’t possible due to the economy or because your company isn’t performing well, try to learn new skills that would allow you to secure a promotion or a new position at another company. 
  • Take on consulting work: If you have some extra time, consult or freelance on a part-time basis for additional income. For example, you could lend your social media expertise to startups, design marketing plans for entrepreneurs, or do graphic design work for local businesses. 

 

 

How to Build Credit History

If you don’t have a lengthy credit history, it can be difficult to qualify for a loan. To start building your credit history, follow these steps: 

 

  • Ask a friend or relative to add you as an authorized user to their credit card account: If you have a parent, relative, or friend with good to excellent credit, ask them if they will add you as an authorized user to their credit card account. When you become an authorized user, you get access to their credit history and credit line, instantly lengthening your own credit history. Just make sure you set guidelines on how the credit card should be used and how you’ll repay them for any purchases. 
  • Apply for a credit builder loan: With credit builder loans, you take out a loan, and it’s held for you in a savings account. You make payments toward the loan each month. After the loan is paid off, the lender releases the money to you, so it can help you build your savings, as well. Many financial institutions offer credit builder loans.
  • Open a secured credit card account: Without an established credit history, you may not qualify for a traditional credit card, but you can get a secured credit card account. With a secured card, you put down a security deposit that serves as your credit limit. As you make payments, your payment history is reported to the credit bureaus, establishing your credit and improving your credit score. 

 

 

Refinancing Your Student Loans

Improving your credit history, boosting your credit scores, and increasing your income can take time. But within six to 12 months, you can see results and meet ELFI’s refinancing requirements. By refinancing your loans, you can save money and pay off your debt ahead of schedule. 

 

When you’re ready, you can get a rate quote without affecting your credit score.*

 


 

1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 2/7/2020 and 2/21/2020. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.

 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

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2020-09-30
The Best Personal Finance Blogs of 2020

If you’re looking to build strong money management habits, you should consider subscribing to a personal finance blog. All over the internet, personal finance professionals share their wisdom on how to build wealth, pay down debt and establish budgets. You have a world of financial knowledge at your fingertips, so it's time to get started!   With a range of topics and blog focuses, it can be hard to decide where to begin. If you’re all about smart saving, spending wisely and torching your student debt, then here are ELFI’s top picks for 2020 personal finance blogs:

Making Sense of Cents

Making Sense of Cents has a little bit of everything when it comes to building money management habits. Whether you have questions about student debt, insurance or budgeting, this is the blog for you. It’s also been named one of the top personal finance blogs by FinCon, Zillow and the Plutus Awards.   This blog maintains a light, fun tone so it’s easy to read, and it handles a lot of top-level questions about personal finance. Author Michelle also shares about her experiences living in an RV and on a sailboat touring the world. If you’ve caught the travel bug, then you may find some exciting content here.  

Millennial Money Man

Bobby Hoyt, the founder of Millennial Money Man, teaches millennials to pay off debt and live their best, self-employed lives. His blogs focus primarily on trending finance apps and ways to monetize your hobbies. He also shares useful budgeting and spending tips to help set you up for financial success.   If you have a passion for entrepreneurship, Bobby is your man. Enjoy insider tips on growing your business and expanding your income streams, from someone who's done it himself.  

The Budgetnista

Tiffany “The Budgetnista” Aliche is passionate about teaching personal finance. She's also one of Amazon’s #1 bestselling authors for her books on personal finance. Her background as a preschool teacher makes her incredible at explaining high-level financial topics in an engaging, easy-to-understand way. Although she’s developed near-celebrity status as a blogger and speaker, Tiffany's down-to-earth style makes for a relatable, fun read.   From banishing debt to building a strong business, her blog covers best practices for achieving financial success. She debunks money myths with topics like “Debt Freedom Doesn’t Equal Wealth,” to help her readers build money management habits. If you have an entrepreneurial personality and are ready to take the next financial step in your personal life or your business, The Budgetnista blog is for you.  

Afford Anything

If you’re a travel fanatic, you’ll love “Afford Anything." Author Paula Pant has traveled to more than 40 countries. She speaks to financial independence and real estate investing, her two primary categories of expertise. She’s built self-sustaining wealth by investing in real estate and uses her free time to teach others how to do the same.   Her blog is all about cutting back expenses in unnecessary areas while spending on the things you love. She writes for readers who want an actionable strategy for spending and saving wisely. If you’re interested in building wealth or in real estate investing, this is one blog you won’t want to miss.  

Broke Millennial Blog

Broke Millennial Blog author and speaker Erin Lowry wants to teach you how to get your financial life together with a 5-step plan designed to help you take charge of your finances. Her blog focuses on popular millennial topics, like budgeting strategies for different personality types and awkward money situations. If you feel like you could use a little financial direction, this blog is probably a great fit for you.   If you love the Broke Millennial Blog and want to take the next step in your financial journey, Erin makes it easy! You can subscribe to the blog’s email list for access to a free money management worksheet designed just for readers.  

Stefanie O’Connell

Stefanie O’Connell wants to help you travel the world, create a living space you love and have healthy financial conversations with your significant other. Her blog addresses financial conundrums you may have wondered about but have been afraid to ask, like “Why I’m Not Having Bridesmaids at My Wedding” and “4 Ways to Buy a Home When You don’t Have Enough of a Down Payment.”   Stefanie’s upbeat, relatable blog gives readers a sense of familiarity. She doesn’t cut corners and gets straight to the heart of financial questions. Her blog offers direction if you’re interested in investing, budgeting or establishing healthy financial boundaries in your relationship.   Every reader interested in learning more about financial topics should check out ELFI’s recommended blogs. If you’re loving the ELFI blog, don’t forget to check out the rest of our topics for even more great information about managing your student loan debt.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
2020-09-25
3 Financial Goals to Achieve Before Marriage – And Some That Can Wait

Marriage is both a personal and financial turning point that opens up a new world of financial opportunities and struggles. However, with proper planning, you can minimize the challenges and make the most of financial opportunities. Check out these financial goals to achieve before marriage, as well as a couple of others that you’ve still got time to work toward:  

Financial Goals to Achieve Before Marriage

The Emergency Fund

For many couples, the COVID-19 pandemic has made the importance of emergency funds exceptionally clear. Especially as you enter into your first few years of marriage, it’s important to build a strong financial foundation so you’re prepared for unexpected expenses, from home repairs to medical bills.
Financial hardship is a leading cause of divorce, and in these uncertain times, an emergency fund can help to weather the storm.   In addition, an emergency fund provides a way to ease financial anxiety and distress even when times aren’t tough. When you know you’re prepared with emergency savings, there’s no need to panic if the unexpected happens.  

Setting a Monthly Budget

Even if you aren’t getting married, creating a budget is a great financial step, and is something you should do right away. Work with your partner to outline your regular expenses, as well as any expenses that may arise in your first year of marriage. Make sure you provide yourself with some flexibility in your savings and begin building an emergency fund if you haven’t already.   There are several useful tools that can help you keep track of your budget, including apps like Mint. You can also employ a budgeting strategy to keep your saving and spending on track. Several popular budgeting methods include the 50/20/30 rule, the Zero based budget and the cash envelope system. Not only will a budget be good for your finances, but it will be good for your marriage, as well.  

Setting Goals for the Future

Yes, setting goals is a goal. You and your future spouse should lay out financial goals before getting married. It’s important to be on the same page when it comes to debt repayment, housing plans, savings goals and other major financial milestones. Plus, it’s good to know what your spouse is looking for, and a good plan helps to avoid financial stress that can really harm a marriage.  

More Flexible Financial Goals

Making a Down Payment

While it’s great to start saving for a down payment before marriage, it’s not necessary to be entirely ready to buy a home before tying the knot. Especially if you’ve already established good money management habits, you can always continue working toward this financial goal as a married couple.   Even if you don’t have the money for a down payment right away, you can easily establish a strategy to save toward a down payment. Experts recommend planning on putting a minimum of 10% down for your down payment and the more you can save, the better. Stay focused and keep saving. You’ll have that down payment in no time.  

Becoming Debt-Free

Some couples choose to pay their student debt off before getting married, however, student debt is another financial goal you can afford to wait on, especially if you consider refinancing. After your wedding, you may choose to prioritize other expenses that come with building a life together, like a new car or home, before tackling the remainder of your student debt.   That said, you certainly don’t want to forget about your student loans. By refinancing your student loans, you could earn greater financial flexibility by lowering your interest rate or changing your student loan repayment term. Refinancing can provide you with the options you need to achieve financial goals with your new spouse.  

Tips for Tackling Student Debt

As a general rule, it’s best to first tackle whichever debt is incurring the most interest. Debts with high interest rates can easily spiral out of control, and while it may not be essential to totally eliminate your student debt before your marriage, it is advisable to develop a plan to do so.   The good news is, you can employ several strategies to make paying off debt a less intimidating ordeal. Two of the most popular repayment strategies are the debt snowball and the debt avalanche. These two plans take opposite approaches. While the debt avalanche calls for dealing with the highest interest debt first, the debt snowball calls for dealing with the lowest amount of debt first and using the momentum to pay off debts one by one. The right method for you depends on your situation, but both can be incredibly effective if used correctly. Again, it’s worth noting that it isn’t necessary to have your debt entirely paid off before getting married, but you should develop a plan for paying it off before you say “I do.”   A marriage is a big change, but it doesn’t have to be stressful. By taking the time to have fun and create a few financial goals, you’ll set yourself up for success even before tying the knot.  If you’re getting married soon, you also might be interested in budgeting for your wedding. Check out our guide here.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
person making pros and cons list for refinancing private student loans
2020-09-25
10 Pros and Cons of Refinancing Private Student Loans

This year we have seen record low refinancing rates for student loans. If you have private student loans and have been thinking about whether you should refinance them, we hope this post will help you make a decision. We will run through the essentials and the pros and cons of refinancing your private student loans.  

6 Benefits of Refinancing Private Student Loans

Private student loans are loans borrowed through banks, credit unions or other private lenders and can consist of original private loans or a loan that you already refinanced. When you refinance, there are many benefits you can experience. Here are the pros of refinancing your private student loans:  

1. Obtain a Lower Interest Rate

When you refinance a private loan, you are paying the loan off with the new loan you borrow.  The new loan can have a lower interest rate than the rate you previously had on your old loan. A lower interest rate can lead to thousands of dollars in savings depending on the amount of the loan, your old interest rate and your new rate. A lower rate can help reduce your monthly payment and save you money in interest cost over the loan term.  

2. Make Your Repayment More Manageable

If your monthly payment is becoming difficult to pay, refinancing is a good way to help make your payment more manageable. This can be done by obtaining a lower interest rate, as previously mentioned, that can help lower your payment. You can also lengthen the loan term when you refinance. When you extend the loan term it makes the monthly payment lower, but will increase the amount of interest charges you will pay.  

3. Pay Debt Off Faster

Ready to pay your loan off faster? This can be achieved through refinancing in multiple ways. If you have 10 years remaining on your loan term and
refinance to a 7 year loan term or shorter , you will have a higher payment but will have the loan paid off 3 years earlier. Another way to pay off your loan faster is if you refinance and obtain a lower interest rate, your payment will be lower monthly. But if you continue to pay your old monthly payment or more towards the new loan you will be able to knock out your debt quicker.  

4. Release a Cosigner

When you refinance your private student loan you can use the opportunity to release a cosigner from your previous loan. As long as you have a strong credit history and credit score, along with stable income, you can qualify for the new loan on your own. To qualify for the best interest rates available most lenders look for a credit score at least in the high 700s. At ELFI a minimum credit score of 680 is needed for refinancing.*  

5. Combine Multiple Loans

If you have multiple student loans, refinancing is a great way to simplify your finances. You are able to pay off all the previous loans and focus on paying off just one loan. It’s also easier to keep track of your due date so you never miss a payment. Having only one loan may also help keep you motivated on your debt paying journey instead of seeing multiple student loan debts you have to pay.  

6. Choose a Different Lender

If you are not happy with your current student loan lender, refinancing allows you to change to a different refinancing lender by refinancing with whichever lender is the best fit for you. So if you have questions about your loan but can never seem to get answers from your lender, refinancing can help you fix that. At ELFI we pride ourselves on providing a simple and easy process for refinancing along with award-winning customer service loan advisors.

However, just like there are benefits to refinancing private student loans, there are also some cons to consider.  

1. Lose Benefits with Your Current Lender

If you refinance your student loan with a different lender, you may lose benefits you have with your current lender. Some benefits that lenders may provide are an interest rate deduction for setting up auto-pay for your payment, forbearance options, or career coaching. Before you look to refinance with a different lender, weigh whether a new interest rate from a different lender outweighs any benefits you may be giving up.

2. Get a Higher Interest Rate

If you are refinancing to extend your loan term to make the payment more manageable, you may end up with a higher interest rate then the previous rate you had. This would make refinancing your loan more costly in the long term because of the additional interest you will end up paying. In order to avoid this, make sure to get personalized rate quotes from multiple lenders so you know your options and how it will affect your monthly payment and the total amount of interest you will pay.

3. Raise Monthly Payments

When you refinance you have the ability to choose a new loan term. Selecting a shorter loan term then the amount of time you had left on your loan can increase your monthly payments. Typically refinancing lenders provide loan terms of 5, 7, 10, 15, or 20 years. If you had 8 years remaining on the loan you want to refinance and select a loan term of 7 years you may see an increase in your monthly payment unless you are qualifying for a significantly lower interest rate.

4. May Extend Time to Repay

When selecting your loan term when you refinance, if you choose a longer loan term then the amount of time you had remaining on your loan, you will be stuck paying the debt off longer. However, this can be beneficial if you need to lower your payment to fit within your current budget. You can also combat this issue by paying more than the required monthly payment when you can afford it, to help pay the loan off quicker.

The Bottom Line

Every financial situation is unique so it’s best to determine what is right for your circumstances. When you weigh the pros and cons of refinancing private student loans, you will most likely find it is advantageous for you because of all the different potential benefits.  
  *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.