Does Refinancing Student Loans Hurt Your Credit?

By Corey Buhay | Published on October 21, 2025

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Refinancing¹ your student loans has clear financial advantages — like giving you the chance to nab a lower interest rate, change your loan terms, or reduce your monthly payments². But, as with any big financial decision, it’s good to be aware of any potential negative credit impacts before you move forward.

So, what are those impacts? Does refinancing student loans hurt your credit — or can it actually help boost your score over time? Here’s what you need to know.

Can refinancing hurt your credit?

When you refinance, you’re ultimately applying for a new loan to replace your current loans. That means your refinance lender will have to conduct a “hard credit inquiry” before they can approve your application. Hard credit inquiries typically result in a small credit score drop.

What is a hard credit inquiry?

A hard credit inquiry (also called a “hard credit pull” or “hard credit check”) is part of the underwriting process. It means your credit report gets pulled so that the lender can review your credit history. Any time you apply for a private student loan, auto loan, mortgage loan, or any other credit account with a private lender, that financial institution will conduct a hard credit check to review your spending behavior and personal finances. They want to make sure any potential borrowers have a demonstrated track record of responsible repayment. (When you apply for federal student loans or undergo federal loan consolidation, on the other hand, you typically won’t trigger a credit check.)

By comparison, a soft credit inquiry occurs when a company or person looks at your credit report for a reason other than underwriting a loan. A soft inquiry has no impact on your credit score. Unlike a hard credit check, a soft pull may happen with or without your permission. Checking your own credit score is also considered a soft credit pull.

How do hard inquiries affect your score?

Any hard inquiry will have a temporary impact on your credit score. Typically your score will drop by five points or less. All hard pulls stay on your credit report for up to two years, though they may only affect your score for a few months to a year, depending on the credit scoring model.

Limiting the impact of rate shopping on your credit score

If you submit a number of applications in a short period of time — typically 14 to 45 days — credit bureaus will lump them all together into a single hard inquiry, which means your score will only drop once. This is called the “rate shopping exception” to the credit-impact rule. If you spread out your applications over a longer period of time, however, you could experience a small score drop for each one.

According to Equifax, when you have multiple inquiries made by auto loan, mortgage, or student loan lenders, they don’t often impact your credit score. This may not apply to other lines of credit, such as applying for credit cards, however.

Missing payments while refinancing

The other way you can have your credit score affected by refinancing is if you miss a student loan payment during the refinance process. Make sure to continue to make payments on your old loan while your refi application is processing. Don’t stop making payments until after you receive a letter telling you that the payoff period is complete. Otherwise, your credit score could take a hit.

Once you’ve signed your new loan agreement and finalized your student loan refinance, you will want to keep making on-time payments with your new loan. Missing a payment after refinancing will have the same negative impact on your credit score that it did before you refinanced.

How refinancing can help your credit

Over the long term, student loan refinancing can actually help you boost your credit score. If you use refinancing to secure a longer repayment term — and therefore a lower monthly payment — that ensures you’ll be able to make on-time payments for years to come². In the long run, that can help you improve your payment history, which makes up 35% of your FICO score.

If you meet your lender’s eligibility requirements, you could also score a lower interest rate. That helps you save money over the life of the loan — giving you more cash to put toward other, higher-interest debts. That can help you reduce credit card debt and other forms of debt that could be eating away at your credit score (and your savings).

It’s important to be aware of the impact you could have on your credit score. However, this shouldn’t stop you from shopping for a lower rate that could help you make a positive impact on your credit score in the long term. Ready to see how much you could save? Check your rate with Earnest today. It’s free, it only takes about three minutes, and it only involves a soft credit check — which means it won’t affect your credit score.

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About the Author

Corey Buhay is a writer and editor based in Boulder, Colorado. She’s passionate about literature, the outdoors, and doing her taxes by hand. She has been writing about student loans and personal finance for Earnest since 2019. You’ll find her work in Outside Magazine, Backpacker Magazine, Smithsonian, and The Denver Post.

Disclaimer

Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest. This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

1 Please note that you may lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans (an example of which is the SAVE plan), Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan.

2 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.