Can you raise your credit score by taking out a personal loan? You can if you borrow responsibly – and a new study from LendingTree.com shows that borrowers with lower credit scores can see significant benefits.
Outstanding personal loan balances have nearly tripled since 2011, rising from $46.4 billion to $125.4 billion by June 2018. While that’s a small slice of America’s $13.54 trillion total household debt, the effect on credit scores shouldn’t be ignored. LendingTree found that 62.4% of personal loan recipients had a higher score one month after receiving a loan – surprising since pre-loan credit checks from lenders should drop scores slightly.
The credit score increase in the first month may come from borrowers shifting high-interest balances to a more manageable personal loan and making an impact with their first payment. According to LendingTree, 61% of 2018 personal loans were used to