 TITLE: How Does a Personal Loan Affect Your Credit Score? CONTENT: How Personal Loans Can Hurt Your Credit\n---------------------------------------\nReady to fill out that personal loan application? Not so fast. Personal loans also have some downsides you should be aware of.\n*   **Creating an inquiry on your credit report**: When you apply for any type of credit, including a personal loan, lenders will do a credit check on you. This results in a hard inquiry on your credit report, which negatively affects your credit score. The dip from a single hard inquiry lasts only a few months; however, too many hard inquiries can do more damage to your credit score. If you're applying for personal loans from multiple lenders to get the best terms, consolidate your applications into the span of a week or two to minimize their negative impact on your credit score, since credit scoring models view this as rate shopping and don't ding your credit for it.\n*   **Getting you deeper in debt**: Taking out a new personal loan means taking on more debt. If you use the personal loan to pay off higher interest debt, it's important to make sure you also change the habits that got you into debt in the first place. For instance, if you use a personal loan to pay off a maxed-out credit card, and then start charging more than you can afford on that card again, you could easily end up with a maxed-out credit card ... _plus_ a personal loan to pay off.\n*   **Additional fees**: In addition to the interest you'll pay on a personal loan, don't forget about loan costs such as origination fees or late fees. Make sure you understand all of the fees involved before you apply. If necessary, consider borrowing enough to cover the fees. END