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Student loan refinancing rates are close to record lows, but you can expect a drop.

It makes sense to follow the current benefit for student loans options that suspend federal student loan payments. It’s free money more or less and can help you get your finances in shape.

But when that benefit ends, as scheduled for September. 30 – or if you have higher rates of private student loans without relief programs – you may want to reconsider refinancing your student loan.

Refinancing rewards with great credit and healthy personal finances. Here’s how to make sure the best deal is waiting for you.

Improve credit

Refinancing lenders consider many factors to determine your interest rate. You may not be able to immediately transfer the needle to some of them, such as your earnings.

But you can improve others.

For example, a better loan price usually means a higher rate. Refinancing lenders may approve you with a FICO score above 650, but offers are likely to be best for scores in the mid-700s and above.

Look for opportunities to improve your credit score. One of the main factors in the effectiveness of FICO and VantageScore credit scores: the percentage of available credit that remains when used. If you use more than 30% of your credit either on one card or on all your current accounts, strategically paying off balances can help you.

You can also make payments in two weeks to keep your balance low, or ask for higher credit limits.

The history of timely payment of bills is the key to a high credit score, but the reduction in the use of loans is one of the levers available for quickly build credit.

Repay the debt

You may have extra money due to suspended student loan payments. If you don’t need it in an emergency fund, consider using that money to repay one or more debts.

When deciding on your offer, refinancing lenders usually consider yours debt and income ratioor DTI. DTIs are monthly financial liabilities divided by your monthly income.

For example, let’s say you earned $ 4,000 a month and paid $ 2,000 in rent, cash student loans, etc. Your DTI would be 50%, which is about as much as any refinancing lender would like.

Of course, a lower DTI is better and can increase the number of offers available to you. Therefore, the use of debt tracking and verification of monthly payments can reduce or completely knock out.

Can you pay off credit cards or consolidate them into a lower down payment? (Don’t close accounts that could hurt your credit score.) Or could you first refinance other debts with higher interest rates like car loans?

Watch the tariffs

When current refi interest rates move higher than you eat – and assume you want to refine eventually – consume faster than later.

Keep this in mind: a $ 30,000 loan at 6% usually amounts to $ 144 percent each month. That percentage lives now, but it survives. As soon as the suspension of payment is over, interest will begin again.

If you’ve funded 4% per month before the end of the term, you’ll still be out in less than five months, saving about $ 30 per monthly bill.

If you have private loans, check your rates now. Private loans have a federal benefit – like the current interest rate waiver – so you’ll get a bit of a refinancing shortfall if you can get a higher rate.

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