04/03/2015 02:35 pm ET Updated Jun 03, 2015

6 Things You Need to Know to Lower Your Student Loan Payments

Student loan refinancing sometimes referred to as a private consolidation, is emerging as a powerful tool for graduates to save on their student loans. Refinancing allows you to take advantage of your improved financial standing to receive a potentially lower interest rate loan compared to the one size fits all federal loans that were offered to you while in school. Even the smallest decrease in your interest rate could save you thousands of dollars over the lifetime of your loan.

As a marketplace for student loan refinancing, Credible has the unique opportunity to work with multiple refinancing lenders and learn what factors are the most important in order to get the best rates across all potential lenders. Whether or not you feel like you can check off the tips below, see if your interest rates are competitive by checking out Credible to determine if refinancing is right for you.

Here are our top tips to help you save thousands on your student loans:

1. Apply With A Cosigner

Adding a cosigner can help most applicants receive a better interest rate on a loan. Be sure to choose a cosigner with great credit history and employment record. The idea of a cosigner is to add financial backing to your application, so the more qualified the signing cosigner is, the better.

2. Have Long-term Work Experience

Proving financial stability will help remove risk lenders may be concerned about. Stable employment for over a year will help validate your financial situation and prove to lenders that you will have the means to pay over the lifetime of the loan.  

3. Be In Good Credit Standing

Your credit score is very valuable in determining how strong of a refinancing offer you will receive. It is recommended to have at least a 650 or higher credit score. If you have an average credit score you will likely receive an average offer. Try to improve your credit score as much as possible before looking to refinance if you want the lowest rate possible.

4. Have A Low Debt to Income Ratio

Regardless of how much you are looking to refinance, having a good debt to income ratio is always important. Lenders will look at your monthly expenses as a fraction of your monthly income. Most lenders will primarily look at your monthly student loan payment and your housing expenses to determine your monthly debts. Try to minimize this ratio to receive the best refinancing offer possible.

5. Be Aware Of Current Market Rates

Keep and eye out on current market rates. Interest rates have been at historic lows, as low as 1.92%, signaling a prime time to refinance. Refinancing lenders currently offer rates lower than the rates given on federal loans in the last ten years. Stay current on the trends in the market to make sure you are not missing out on the years best offers.

6. Check Out Multiple Lenders

Be sure to compare multiple lenders to find the best offer on the market. The student lending market is growing quickly and there are over ten lenders that could help you save on your student loans. Lenders have different underwriting models that determine your loan eligibility, so your degree of qualification may differ between lenders. Check out Credible student loan marketplace to compare lenders and see how much you can save.

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