Downtimeonline finance Is Getting A Personal Loan To Build Credit A Good Idea?

Is Getting A Personal Loan To Build Credit A Good Idea?

If you have a chequered credit history – or even if you do not have much of a track record as a borrower, you may be considering getting an instant personal loan app to develop your credit score. 

It is obvious that if you are unable to handle the risk that comes associated with it, it can hurt your credit score. Lenders may think twice and be wary before giving you a loan if you apply again. 

This implies that getting a personal loan or any other sort of credit agreement to enhance your credit score is a decision that cannot be taken lightly. 

Do loans have an impact on my credit score?

The answer is yes, personal small loans do create an impact on your credit score, however with on-time repayments, this will be in a positive way. You should keep in mind the interest rate at which you have availed the loan. Another aspect to be considered is the loan eligibility requirements. Several banks provides many options regarding a personal loan through their apps with a personalized repayment plan, which can lead you to have a favorable impact on your credit score in the long term. 

Before making an application for a fast loan, it would be helpful to assess your eligibility to get an idea of whether your loan application will be accepted. 

It is also important to note that when you apply for a loan to borrow funds, lenders will conduct a ‘’hard search’’ on your credit history. This happens through a detailed investigation of your finances and the capacity to make repayments. And this search so conducted gets stored on the file, which means other lenders can view it. 

If you apply for multiple loans at the same time and they get rejected, it can impact your credit unfavorable, and lenders might assume that you are desperate for a urgent loan

Will paying off a loan enhance my credit score?

If you have made all your mobile loan repayments on time, then such payments can positively impact your credit for around ten years. However, in the short run, paying a personal loan might lead to your credit score coming down temporarily if that was the only loan taken per your credit report. 

Can you get a loan if you have a credit score of 550?

A credit score of 550 or so is typically seen as poor. Credit agencies have various scoring patterns, from 0-1000, and a score of 550 is generally considered an area that needs improvement. A weak credit score might make acquiring a loan challenging, but some options are still available for you. 

Can I apply for personal loans without having affected my credit score?

Unluckily, you cannot apply for a loan or any other type of loan or credit without the lender needing to conduct a credit check initially. This is so because it is required to know about your capacity when it comes to repayment of money that you have borrowed. 


If you have a poor credit score, do not be disheartened. There are several personal loan options available for those having bad credit, which can let you enhance your credit history. Having a proper plan, you can manage your liabilities and improve your credit over time. 

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