Yes, a personal loan can impact your credit score in various ways. Initially, qualifying for a rate and loan amount typically doesn't affect your credit score, as lenders usually perform a "soft pull," which has no impact. However, once you accept the offer and apply, the lender will conduct a hard credit check, which may temporarily lower your credit score by a few points. However, once approved and you begin making payments, a personal loan can contribute positively to your credit score. Timely payments are a key factor in your credit score, demonstrating responsible borrowing behavior to credit bureaus such as TransUnion, Experian, and Equifax. Additionally, a personal loan can improve your credit mix, which refers to the variety of credit types you have. Having a diverse mix, including credit cards, a mortgage, and a personal loan, can positively impact your score. It's crucial to note that taking on a personal loan you cannot afford to repay can harm your credit score. Late or missed payments can significantly lower your score, and defaulting on the loan can have severe consequences. Therefore, it's essential to only opt for a personal loan if you're confident in your ability to make the payments.
