Dear Student Loan Hero,
I have seen low rates for refinancing and was curious to see what I would be offered. However, I was denied unless I added cosigner — with the explanation: “The number of open trade lines on (your) credit report does not meet the minimum required for loan approval.”
Does that mean they are denying me because I don’t have enough accounts open? My credit score is 763. I wasn’t expecting to be denied.
Dear Student Loan Borrower,
I’m sorry to hear about your surprise rejection, but at least there’s a bright spot: Most borrowers don’t know why they didn’t qualify for student loan refinancing. At least you were given a reason, even if it contained wonky jargon.
As you might already know, student loan refinancing companies — including banks, credit unions and online companies — mitigate risk by lending to borrowers who have a history of repaying what they borrow. Without that history to go on, lenders typically quote higher interest rates or, as in your case, stamp denial on applications.
“Trade lines” could be a part of the lender’s underwriting criteria. Simply put, a trade line is the record of activity of each account listed on your credit report. Your existing student loans, for example, each have a trade line.
That’s where your potential lender’s response gets a little foggy. After all, an open trade line could have two different definitions:
|An account that is open (or open-ended), with no fixed end date, such as forms of revolving credit||Your application might have been denied if you have never used a credit card, for example|
|An account that is open in the sense that it’s not closed and remains active, such as a loan in repayment||Your application might have been denied if you recently closed all your old credit card accounts, for example|
To understand what your lender was referring to, follow up with its customer service. If you don’t like the response, consider that not all lenders have the same criteria to qualify.
CommonBond, Laurel Road and Splash Financial are examples of refinancing companies without open trade line requirements. CommonBond, for instance, only says you need at least two years of credit history.
Back to the bright side: Your 763 credit score is indeed a strong one and more than enough to qualify for refinancing. As soon as you understand how to round out the rest of your application, you can start to visualize those lower rates you’re seeking.
Here are some additional resources that could come in handy:
Best of luck with your next application,
Student Loan Hero
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