Ever been turned down for a loan? Then you know that the rejection process is only a bit more constructive than the aftermath of a bad date: If a lender decides not to fund your loan, you’ll get a standardized letter, along with contact information for the credit bureau it used to make the decision. As a borrower who was denied credit, you’re entitled to a free copy of your credit report from that bureau.
The Fair Credit Reporting Act requires lenders to take these steps, and few go beyond them. But SimpleFi is trying to change that process. The lender — which has its roots in military loans and workplace financial wellness programs — sets itself apart by working with borrowers who are declined for a refinance, offering them credit improvement coaching and tools so they’ll eventually be able to reapply and be approved. And SimpleFi has now launched a student loan refinancing platform as well.
Connecting with all borrowers
“Our goal is to be as all-inclusive as possible, even to the lowest rung on the FICO ladder. We’ll take someone with a very poor FICO score and educate them to help them improve their score so that eventually they can qualify for a loan. Other lenders don’t really connect with the borrower at that level — you either qualify given their criteria or you don’t,” says company president Adam Potter.
In some cases, SimpleFi will even issue borrowers loans to help them improve their credit. Interest on these loans will be set at market rate, but even if SimpleFi doesn’t save borrowers money, it’ll help boost their scores by providing financing to pay off delinquent debts and reporting on-time payments to the credit bureaus, says Potter.
“We’ll give the customer the path to approval if we can’t approve them immediately,” he says.
Of course, some customers will be eligible to refinance their student loans right away. Here’s how that process works:
Soft launch eligibility
During an initial “soft launch” period of the student loan refinancing program (a broader launch will come later in 2015), SimpleFi is limiting refinances to borrowers with FICO scores of 720 and above. One could argue that that contradicts its goal to be, as Potter says, “all-inclusive.”
But borrowers who don’t qualify for a loan initially aren’t left hanging — they can begin working with the company to improve their credit, with the goal of obtaining a loan during the full launch. At that point, SimpleFi will also loosen credit criteria and allow borrowers to use co-signers to qualify. And according to Potter, the company believes that focusing on a smaller pool of borrowers at first will allow it to hone its refinance process.
Unlike many refinancers, SimpleFi doesn’t have minimum loan amounts. The company offers refinance and consolidation loans to both graduates and parents, but doesn’t offer student loan originations.
SimpleFi is a part of Nerdwallet’s student refinancing marketplace, created in partnership with Credible.
SimpleFi’s refinance rates start at 4.99% and go up to 6.99%, depending on the term of the loan, rather than the borrower’s FICO score — but those with the highest scores will likely see a 1% discount. Loans are available in five, 10, 15 and 20 year terms. The company also offers one-on-one coaching to help clients decide which loans to refinance and which ones to leave as is. For example, when refinancing federal student loans into private loans, certain benefits may be lost.
SimpleFi borrowers may miss one loan payment per year and pay interest only for the first 24 months. They can sign up for unemployment protection, receive an interest rate break when they choose autopay, and won’t pay origination fees or prepayment penalties.
SimpleFi has a standard loan application that returns an approval within 48 hours. It may take a bit longer to receive a response when a loan is declined, so the company can evaluate the borrower’s credit report and determine what assistance it may be able to offer.
The bottom line
SimpleFi’s commitment to helping its borrowers improve their credit is nearly unmatched in the lending community. Borrowers who have higher credit scores may be able to obtain a lower rate elsewhere, however, so the standard advice applies: It’s always worth shopping around.
This post was updated. It was originally published on Aug. 4, 2015.
Image via iStock.