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How to fix reject for Student Loan Refinancing

Here are the most common reasons why you can refuse to refinance student loans, as well as some tips on how to improve your chances.

1. Income
One of the reasons why you can opt out is your income. Lenders want to know that you will return your debt, and one of the biggest indicators they have is how much you earn. Because of this, approval for refinancing is more difficult for those who are unemployed, incomplete or working in low-paying jobs.

But even if the lender thinks your income is too low, there is still hope. If you need to enhance your application, you can always submit an application using cosigner. Cosickers are usually people with whom you are closely connected, for example, with your parents or spouses.

If you miss a payment or otherwise cannot repay your debt, your coordinator will be legally responsible for that. But if you make agreed, timely payments, the lender can eventually free your debtor from the loan.

In the meantime, you can also try to increase your income. With proper budgeting and sustainable work, you can increase your income along with your chances of refinancing student loans.

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2. Debt to income ratio
In addition to your annual salary, lenders also consider a debt to income ratio (DTI). A typical calculation takes into account all your monthly payments on debts (for example, for a car loan, credit card or mortgage) and divides it into your gross income (your income before taxes and deductions).

Lenders look for low DTI rates, usually 40 percent or less, but each lender will have its own specific requirements. Even if you do six digits, you may not qualify for refinancing if you also have six digits in debt.

A cosigner application can help make your application stronger. If a pigtail has a back, you will not seem to be such a dangerous candidate for a refinanced student loan.

You should also strive to pay your debts as quickly as possible. For example, if you have credit card debt, consider switching to a card with a lower interest rate. Sometimes it is even useful to pull out a personal loan with a low interest rate in order to quickly pay off credit card debts with a high interest rate.

The sooner you improve your DTI, the sooner you get approval for refinancing student loans.

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3. Employment history
You are much more than your job, but on paper, your job and your employment history play an important role in whether you are approved for refinancing or not. Some lenders also give priority to borrowers who work in certain areas.

Most lenders ask for confirmation of employment or a job offer letter. Lenders want to know that you have a stable job now, and that you will continue to have it in the future.

If you do not have a stable job, put it off until you do it. Make your job search a priority over refinancing. Once you have established a steady source of income, you can again try to apply for a refinancing student loan.

4. Repayment history

They say that the past is the biggest indicator of the future, and potential lenders definitely adhere to this rule. Even a one-time mistake can ruin your debt repayment report. Some lenders may be more forgiving, but as a rule, they are looking for borrowers who can manage their payments and make them on time.

Despite the fact that late payments remain on your record for seven years, you can still take steps to improve your credit. Paying your debt and making timely payments can help your loan go back.

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5. Credit Score
Your credit score is essentially your creditworthiness GPA — a numerical value that lenders use to measure your risk as a borrower.

Your payment history, credit utilization (the size of your credit limit that you use), the length of your credit history, and the amount of debt should affect your credit rating. If you miss a few payments or constantly pay your credit cards to the limit every month, you can be considered a risk.

To qualify for student loan refinancing, you need a good credit rating. But what is considered good? Most lenders want a rating of 680 or higher. SoFi, a popular refinancing lender, will consider applicants with a score of 650 or higher.

You can control with how to use a free credit rating service such as credit karma. In addition, you can request one free credit report per year from If you find any errors, do not forget to dispute them and remove them from the report.

If you continue to make timely payments on your debt, your credit rating will increase over time. And it will give you the best chance to approve the refinancing.

You can improve your right to refinance over time.
These are the most common reasons why people refuse to refinance. But by being proactive about your finances, you can increase your chances for approval.

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Should you get a credit card, if you pay student loans?

If you are suffering from student loan debt, like a staggering 40 million Americans, then you may be afraid of plunging into the credit card scene for fear of even more debt. Or you may simply wonder what is the point of using a credit card when debit cards do many of the same things.

Although there is always the threat of credit card debt, if you are responsible for your finances and make credit card payments on time, getting a credit card can be a reasonable financial step. Not only is it desirable to adapt to using a credit card responsibly, but it can also help you build your credit.

To help you make your decision, here are some pros and cons of getting a credit card to pay off a student loan debt:

Reasons why you must pay your loans before you get a card
1. You do not care about your expenses. If you have a credit card, research shows that it is much easier to spend on something that normally would not have, especially if you have a substantial balance. You can easily get credit card debt in addition to student loan debt. The average APR credit card throughout the country is about 15%, while student loans are much lower.

2. You are worried about timely payment. Using credit cards can divert attention from your debt repayment strategy. You already have one bill to remember every month: your bill for a student account. Sometimes adding to a credit card or a few credit cards makes it more difficult.

3. You have yet to learn discipline. When you fulfill all efforts to repay student loans, you develop a level of financial discipline. Because of this, you will be less likely to get into a debt trap with credit cards if you wait to use them until your loans are repaid, because you will know how difficult it is to get out of debt.

Reasons why you should not pay your loans before getting a credit card
Continuing the list, here are the positive sides of getting a credit card:

4. You want to create a credit history. Credit cards, along with your student loan history, help build your credit if you use them responsibly. Credit cards are considered to be a revolving loan (without a predetermined loan or repayment schedule), as opposed to student loans, which are considered to be installment loans (with a fixed balance to return to a specific time). A revolving loan and how you use it is 30% of your FICO credit score, so it is important to pay the balance monthly.

5. You want to track expenses. Credit cards, when used properly, can help you keep track of your spending habits in such a way that cash use cannot. A debit card can do the same, except for debit cards, there may not be so many built-in benefits and protections as credit cards.

6. You need free benefits and benefits. Speaking of built-in credit card protection, many credit card companies automatically include such things as car rental insurance or travel insurance. Types and amounts of protection vary by card, but they are quite common in all types of credit cards.

7. You learn to be financially responsible. If you can process a credit card, and not overspend, and do not forget to make your payments every month, then you are certainly ready to make a plan to aggressively pay off student loans.

Ultimately, the choice of whether you should pay off your loans before applying for a credit card depends only on you.

When you get your first card, use it for small purchases, for example, go to a grocery store or get gas so you are used to using it and paying for it in a timely manner.

It is also wise to set up your credit card for automatic minimum payment. Although we strongly recommend fully paying off your credit card every month, automatic backups are excellent if you forgot to pay.

Remember that your payment history is 35% of your credit score, so first of all, make sure that you always pay your credit card on time every time.

With these tips, you should be on the path to responsible card ownership, regardless of whether you wait for your student loans to pay off to apply for them.

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Take a vacation of your dreams, paying off a debt

Icelandic beautiful geothermal Blue Lagoon. Sunsets on the beaches of Brazil. Architecture and music of Portugal. Art and food of Spain. What do they have in common? These are some of my favorite memories of traveling around the world.

Despite the fact that I am willing to pay the debt, a huge passion of my trip. Many personal finance experts recommend that you pay your debts before you travel. While this is great advice for people with huge debt burdens, it can be unrealistic and frustrating. It may take years (or decades) to pay off a debt!

In my life, I paid my debts and traveled on two priorities, and I never regretted it. Here are some tips for budget travel and how you can take your dream vacation while paying off debt.

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1. Cash payment
It goes without saying. Obviously, you don’t want to borrow and go into debt because of your love of travel. Seeing new sights is great, but it kind of hits the target if you have to go back to a larger debt load.

Instead of relying on credit cards or other loans to finance your adventures, save some cool cash. Set up an automatic transfer from your current account to a separate savings account to make it easier.

In addition, make sure that you develop a realistic timeline and budget for your trip so that you can save enough money. For my last trip to Spain, I saved six months and automated my withdrawals on a savings account every month, which I called Spain, respectively.

2. Consider hacking
Have you heard, for example, hacking travel? This is a way to use credit card registration bonuses to get free or low cost travel options. I used to think that this is a fraud and that in fact it does not work.

That was until I realized that I was really ready to pay student loan debts, but I also wanted to travel on the cheap. All the time I heard about how budget travelers travel abroad and do not pay anything for their flights. So I decided to try.

I signed up for an American Airlines credit card, and within a few months I received a reward bonus, and I had 40,000 miles. Surprisingly, 40,000 miles is enough to fly back and forth to Europe in the offseason (usually from October 15 to May 15). In total, I paid $ 63 for my round-trip flight to Spain to cover taxes and airport taxes. I was no longer a skeptic.

Flying is usually one of the most expensive factors on a trip, and my flight cost $ 1,400. Without spending a lot of money on the flight, I drastically reduced the amount I needed to save as a whole, which in turn helped me continue to pay debts.

Now, there is one big caveat: if you are also fighting with credit card debt, then hacking along the way is absolutely not a good idea. Travel hacking should be considered only if you are a responsible credit user without credit card debt. It is imperative that you pay your balance in full each time.

If advertising is not for you, you can still save and search for deals on sites such as Travelzoo, Hipmunk, Kayak and others. To get the best deal, think about flying during the week. In addition, a comparative store between different airports, dates and times.

3. Find cheap rooms
Next to a flight, accommodation is usually the second most expensive one. Instead of using expensive hotels, consider renting through AirBnB to reduce costs.

If you want to spend even less, stay in a dorm or visit CouchSurfing. When I went to Spain and Portugal, I stayed in the hostels and paid about $ 20 per night. In general, it was much cheaper to stay in a hostel than at a hotel.

Another option for a truly adventurous and hardworking is voluntary time in exchange for living. I met several people in my dorm who worked 20 hours a week and received free rooms and meals. Just contact the hostels where you are going and see what opportunities for volunteers are available.

4. Stick to paying off debt
Although the journey is amazing, you don’t want it to derail your progress with your commitment to pay

a, I could get out of debt a few months ago without going on these trips, but take the time to relax and see that the world really inspired my goal of paying the debt.

Before my last trip, I felt some debt fatigue. I was tired of payments and felt that I was working only to make payments, and not a beautiful place.

My two-week trip, which cost less than $ 1,000, completely changed my mind and inspired me to leave the debut

your student loans. Make sure you can keep to the minimum payments, as well as your timeline. If you are planning a trip, you will significantly strengthen your income, then change your mind about the journey or find out how to do it on the cheap.

All my trips, all inclusive, cost 1000 dollars or less. While I am in the “slaughter of debt” mode, $ 1000 is less than one month for me.

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How to create an emergency fund when you return student loans

You know that you must have an emergency fund, but this is easier said than done.

How much money should you save? What exactly is this fund used for? And how do you balance the allocation of money for these student loans (sometimes large) that you need to pay now?

Emergency funds should not be misleading, and they do not need to distract you from other financial priorities. Here is what you need to know to start your own.

What is an emergency fund and why is it needed?
First, let’s start with the fact that there is no emergency fund.

An emergency fund is not what you apply to when you need to pay random bills, such as holidays, vacations, annual registration of a car or a trip to the dentist every six months. These things may not be regular expenses, but they are still expenses that you can expect, and you should consider them in your monthly budget.

If you know that your annual trip to Las Vegas will cost $ X, divide this number by 12 to get the amount you need to allocate monthly for this purpose. Put it on an “irregular spending” savings account.

Your emergency fund is designed for real emergencies — unforeseen scenarios that you could not expect, such as a sudden job loss or a huge health crisis.

If you fall ill, quit, or encounter unexpected car or home repairs, this security system will become your salvation grace.

Murphy’s Law is not just clever cliché; life has to throw unexpected costs from time to time. If the engine of your car dies two weeks after you are fired, you will thank your lucky stars that you have accumulated for this disaster.

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In short, an emergency fund can not only save your budget, it can give you peace of mind (which is something valuable).

How much should I save?
Financial gurus recommend different amounts.

Character television Suze Orman recommends saving enough money to cover the cost of 8 months.

Best-selling authors Dave Ramsey and Jean Chatsky recommend 3-6 months.

Many financial experts shoot somewhere in the middle, saying that you should make mistakes as close as possible to the 6-month side of this spectrum.

Whichever number you choose, it is worth noting that experts do not agree with whether your calculations should cover all your expenses during these months or only your “necessary” expenses.

Do you speak 3-6 months of lunch in chic restaurants and go to the movies, or 3-6 months strictly groceries, utilities and other items not related to luxury? Is cable tv turned on? What about gym membership?

The answers to these questions you decide. If the worst thing happens, and you lose your job, you can resolutely abandon unsecured things so that your money stretches out as long as possible.

Or you can save a little more to give yourself more respite and allow yourself to be pampered (moderately) during a crisis. Decide on your personal posts and plan accordingly.

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Emergency vs Student Loan Fund: How do you prioritize?
There is one question to which we have not yet answered: how do you juggle the construction of an emergency fund with the payment of student loans?

First of all, you must make a minimum payment on your loans. Never skip payments (but this should be understandable). But how should you balance the creation of an emergency fund with additional payments to speed up the repayment of the loan?

Returning to the guru, Dave Ramsey recommends saving $ 1,000 in emergency funds first, then focusing on paying off your debt, and then directing your emergency fund more to cover 3-6 months of expenses. This is a back and forth strategy that balances both priorities against each other.

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However, please note that Dave largely focuses on paying off debt compared to other financial goals. With this in mind, you will have to decide for yourself if this makes sense to you.

Others argue that you should save a larger reserve fund right from the start — perhaps costs by 2 months — to start additional payments on your loans. Once your loans are repaid, create your emergency fund for a six-month mark.

The interest rate on your loans will play the role of your personal decision. The payment of subsidized Stafford loans differs from the repayment of private loans from 10% per annum. If you pay a larger percentage each month, you can start with a smaller emergency fund that would you be able to concentrate on getting rid of high interest debt.

Whatever you decide, one thing is certain: an emergency fund should definitely be part of your short-term and long-term financial plan.

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