 TITLE: Can a Personal Loan Help My Credit Score? CONTENT: Ways a Personal Loan Could Hurt Your Credit\n-------------------------------------------\nWhile there are some clear benefits of using a personal loan to build credit, there are some potential pitfalls to watch out for:\n*   **Missed payments**: Taking on debt you can't afford to pay back could cause significant damage to your credit score. Consider applying for a personal loan only if you're confident you'll have the means to make your monthly payments on time for the duration of the loan's repayment period.\n*   **Credit inquiry**: When you apply for a personal loan, the lender will typically run a hard inquiry on your credit report. Each inquiry typically takes a few points off your credit score. But if you've applied for multiple credit accounts in a short period, it could compound that impact and make it harder for you to get credit in the future.\n*   **Length of credit history**: Every time you open a new loan, it reduces your average age of accounts, which can decrease your credit score slightly. For example, if you've had a credit card for 10 years and an auto loan for three years, your average age of accounts is 6.5 years. Add a brand-new personal loan, and that average goes down to 4.33 years. The length of your credit history, which also considers your oldest credit accounts and the last time you used credit, makes up 15% of your FICO® Score.\nIt's also important to consider that personal loans cost money in the form of interest and other fees. If you're consolidating credit card debt, you may be able to get a lower interest rate than what you're paying now and save money that way.\nBut if you're applying for a personal loan solely to build credit, consider the interest charges and whether there's a better (and cheaper) way to build credit, such as by using a credit card and paying it off in full every month before you accrue interest.\nAlso, if you use a personal loan to consolidate credit card debt, make sure you don't rack up another balance on your credit cards. Doing so may put you even deeper in debt, which can damage your overall financial well-being, and risks damaging your credit. END