Does Student Loan Refinance Hurt Your Credit Score?

When you submit your application to refinance your student loans, your lender will need to conduct a hard credit check, which has a temporary, minimal impact on your credit score.

It typically decreases your credit score by 5 points or less, and you can regain those points again after a few months by maintaining a good credit history.

The hard credit check helps most lenders determine whether you qualify for student loan refinance and influences the interest rate they offer for your new loan.

Learn More: How Often Can You Refinance Student Loans?

• Limit your full application. Private lenders will do a hard check of your credit file only after you submit a full application, which includes completing the student loan application and granting your lender the consent to perform a hard credit check. Make full applications only after you’ve compared the rates and loan terms of different private lenders through soft credit check prequalification.

• Group multiple applications. Submitting several applications within a short period of time can generally count as one inquiry, also called the “shopping period” exception. The designated time for the shopping period varies by the credit scoring model your lender uses, typically ranging between 14–45 days. You can ask lenders about their shopping periods if you’re planning to do multiple full applications.

• Keep paying your current loans. Depending on the refinance lender, the student loan application approval process can take several weeks. Keep making the monthly payments on your current loans while you wait for your new refinanced loan to be up and running.

• Make timely payments on your refinanced loan. A late payment on your new loan will damage your credit score, set you back financially, and even result in the loss of any interest rate discounts or rewards you’re receiving. Consider a longer term to lower your monthly payments and help you keep up with repayment. However, a longer repayment term will typically come with higher interest rates and a larger repayment total on your student loan. If your lender doesn’t have a prepayment penalty, you can also pay more when possible to get out of debt faster.

Learn More: How to Get Rid of Private Student Loans

Refinancing student loan debt affects your score because the new loan amount and payments history will be added to your credit report. Over time, your score can increase the longer you go without a late payment.

After making payments for a while, you can check your scores through one of the three major credit bureaus — Equifax, Experian, and TransUnion — and see if it has increased.