How Personal Loans Affect Your Credit?

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pac4toon
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How Personal Loans Affect Your Credit?

Postby pac4toon » Mon Jul 08, 2013 8:30 pm

I am not sure if this is the correct place to post this question but, how will a new personal loan affect my credit utilization?- Does it affect it at all? Without the loan I am at 4% utilization. I am thinking of getting a personal loan tho, not too big about $8000.

Thanks.
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MemberSince99
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Postby MemberSince99 » Mon Jul 08, 2013 8:45 pm

If you mean your credit score, an installment loan has very little effect (if any that I've ever seen personally) on it.

It also won't affect your credit card utilization as that's factored differently and an installment loan is not included in that. I have a car loan with about 29k of 34k remaining, and fortunately that has 0 effect on my score's utilization calculation.

So I would not worry about it. You will take a ding for the inquiry and the new account, but that's it.

pac4toon
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Postby pac4toon » Mon Jul 08, 2013 9:13 pm

I see. Good to know. Thank you.
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dickey1331
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Postby dickey1331 » Mon Jul 08, 2013 10:54 pm

I also just got a personal loan. Good to hear it wont do too much to my credit. It will actually help since I paid off all my credit card debt with it.
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Daniel
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Postby Daniel » Tue Jul 09, 2013 12:28 pm

Based on what I have read, I was under the impression that for people without another installment tradeline such as a morgage, auto loan, or student loan, having an installment loan can have a positive impact on ones credit score due to credit mix. Individuals already having these other types of loans would show little change in score for a new Personal installment trade. However, none of the material I have read goes in depth into the algorithm to explain the co-dependencies of other variables to this one.

Does anyone else have any knowledge in this area, any empirical evidence one way or another?



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