 TITLE: Can a Personal Loan Help My Credit Score? CONTENT: Ways a Personal Loan Can Help Improve Credit\n--------------------------------------------\nPersonal loans are among the most versatile forms of credit because you can use them for just about anything. And if your personal loan payments are reported to the three national credit bureaus (Experian, TransUnion and Equifax), the positive payment history associated with the loan will help you build credit. It's possible, however, that taking out a personal loan might do more harm than good—especially if you can't afford it.\nYour FICO® Score☉ uses five factors to determine the health of your credit. Here are the three factors that can be impacted positively by a personal loan:\n*   **Payment history**: Your payment history is the most important indicator of responsible credit use and makes up 35% of your FICO® Score. As you make on-time payments on your personal loan, you'll be building a positive payment history and potentially improving your credit score.\n*   **Amounts owed**: Using a personal loan to consolidate credit card debt can significantly improve your credit if it helps you reduce your credit utilization ratio. You can calculate your credit utilization by dividing your credit card balances by their credit limits. For example, a $1,000 balance on a card with a $2,000 limit has a 50% utilization rate. By paying off the card with a personal loan, you reduce that percentage to 0%, which can help increase your credit score. The amount of installment debt you have still affects your scores, but not nearly to the extent that a high credit utilization ratio does.\n*   **Credit mix**: Your credit score also considers how well you manage different types of credit. For example, someone who has credit cards, student loans, an auto loan and a mortgage loan may be viewed more highly by lenders than someone who has only ever had credit cards, even if they've both used their credit responsibly. Adding a personal loan to your credit file can bolster your credit mix and help your credit score. END