Earnest Review Overview
In a marketplace where all lenders blur together, Earnest sticks out as a legitimately different lender.
Earnest evaluates applications differently and approves some borrowers that might get rejected by other more traditional lenders.
The Earnest sales pitch is that you will get better results with them because they are better at making lending decisions. Where some lenders look only to FICO and year income, Earnest looks at the big picture.
This big picture approach makes looking into Earnest a wise decision for many refinance shoppers. As a result, Earnest currently gets the 6th spot in our student loan refinance company rankings.
Meet Earnest Basics
| Earnest Overview | |
|---|---|
| Loan Terms | 5 – 20 Years |
| Variable Rate Loans | 5.88% – 9.73%^ |
| Fixed Rate Loans | 3.94% – 8.98%^ |
| Minimum Credit Score | 665 |
| Minimum Refinance Amount | $5,000 |
| New Borrower Bonus | $150^ |
Like most lenders, Earnest offers both fixed-rate and variable-rate loans. One thing that makes Earnest a little different is that they provide more than the traditional 5, 10, 15, and 20-year loans. Borrowers can choose repayment lengths that fall anywhere on the 5 to 20-year spectrum, meaning if 18 years is ideal for you, you get 18 years to repay your loan.
Earnest calls this feature “precision pricing.” This sliding scale may not appeal to everyone, but it has two main advantages. For long-term planners with specific deadlines, such as retiring in 12 years or buying a home in seven, precision pricing could be ideal. It also works nicely for people who know exactly how much they have in their monthly budget. If you can spare exactly $327.42 per month, you can get a plan that fits your specific need.
Like other legitimate lenders out there, Earnest doesn’t charge any pre-payment penalties or loan origination fees. Paying back your loan is just paying back principal and interest.
Help for more Borrowers: Most refinance lenders only accept borrowers with completed bachelor’s degrees.
Earnest will refinance borrowers with associate’s degrees and borrowers who didn’t finish school.
Navient Purchase of Earnest
When this article was first published, Earnest was a student loan startup out to make a name with their flexible repayment options.
As time went by, Earnest grew and was ultimately purchased by Navient, a massive student loan company with a questionable reputation.
Unsurprisingly, the $155 million purchase of Earnest has led to some changes. Some Earnest customers now complain that things are less consumer-friendly and less transparent.
Those looking to refinance their student loans to get away from Sallie Mae/Navient should look to other lenders offering refinancing services.
Earnest Advantages
One thing that we love about Earnest is that they service all of their loans. Many lenders will refinance your debt but then sell the loan to another company. The quality of the new service you get can be a mystery. Earnest keeps repayment in-house. It doesn’t guarantee better service, but it is better than the alternative.
The most significant advantage with Earnest, and the reason many people may choose to work with them, is their “big picture” approach to lending decisions. They believe that they can make a smarter decision on application approvals by looking at more financial information. We reached out to Earnest to get an example of someone who could benefit from their method, and they provided the following response:
“We have a client who is a librarian with a Masters in English Literature. She makes a public librarian’s salary and is incredibly financially responsible — she pays her bills in full and on time and saves a substantial amount of money in both investment and non-investment accounts. But she also doesn’t have a great credit score — it’s not bad, but not great — because she simply doesn’t use traditional credit cards and credit products. That’s someone who could be instantly denied by a lot of traditional lenders (as well as Earnest competitors), but when we look at that profile, we see someone who is tremendously responsible with her money and deserves our best rates. We think our approach unlocks access to credit for a lot of people who truly deserve it.”
A couple of things stand out from this example: a less-than-perfect credit because of a limited history and building a retirement account. If you are very careful with your money, i.e., saving more than you spend and putting money aside for retirement, Earnest is worth exploring.
However, it is worth pointing out that getting approved for an Earnest loan will still require a credit score of at least 680.
Cause for Concern
Earnest advertises a 2 min application for credit approval, but practically speaking, we do have some concerns about this process. The major advantage of Earnest, the big picture approach, could also become a big issue during the application and loan refinance process. Because Earnest examines more financial information, it means that Earnest will need access to more financial information. It means more records to verify and paperwork to put into place.
Ultimately, if sending in a little bit of extra information lowers your interest rate, it is time well spent, but it does increase the odds of headaches along the way.
Finally, Earnest refinances federal student loans. Refinancing federal loans with a private lender is a risky trade. Borrowers can get better interest rates, but they give up federal perks like Income-Driven Repayment plans and student loan forgiveness. While this can work for some borrowers, for others, it is a huge mistake. Before you refinance, make sure you know whether or not student loan refinancing is for you.
Frequently Asked Questions About Earnest
When you check rates with Earnest, there is a “soft pull” to your credit report. Soft pulls do not impact credit scores.
If a borrower chooses to move forward with Earnest, the company may perform a hard pull when the final application is submitted.
According to the Earnest Privacy Notice, all data entered into their site is protected on multiple levels including firewalls, private subnets, and multi-factor authentication.
Thus far, I have not heard any complaints about Earnest security issues.
When Earnest checks the credit profile of applicants they use their Experian credit report.
The minimum FICO score to refinance with Earnest is 665.
If a borrower applies with a cosigner, there is no minimum credit score for the borrower, and the cosigner needs a minimum credit score of 650.
Earnest Refinance Review: Final Thoughts
Earnest is probably the ideal option for people who are responsible with their money but might not have a huge income or a perfect credit score. If you think your credit score or yearly income doesn’t tell the whole story, Earnest could be the best option.
Given that Earnest has loans with rates starting below 5% and a unique approach, they get a spot in the top five of our student loan refinance rankings.
To check out the rate you qualify for with Earnest, apply here.
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^ The lowest listed rate for Earnest is a 5-year variable rate loan, and rates are listed as an APR. Please see the Earnest Disclosure for more details on rates and bonus terms.