Can an Online Loan Help You Build Your Credit?

Apr 13, 2021

LOS ANGELES - April 13, 2021 - (Newswire.com)

Taking out a loan, regardless of the type, is going to have an impact on your credit score. And whether it causes your score to go up or down is based on your decisions. If you've been considering an online loan, it's critical to understand how to leverage it to help you build your credit and avoid it causing your score to tank.

How Does a Loan Affect My Credit Score?

There are several actions you'll take over the life of a loan that could impact your credit score, either positively or negatively.

Shopping around and applying for loans

It's critical to see what options are available from various lenders. But you'll want to keep actual applications to a minimum. Window shopping to get prequalified results in a soft credit pull, which has no bearing on your score.

When you actually apply for online loans, it triggers a hard credit check which is reported back to the credit reporting agencies.  Multiple hard credit checks are looked on unfavorably, so only apply for the 1-3 loans you really want.

Repayment

If payments are on-time and for the requested amount, you may see an increase in your credit score as a result. But if payments are late or missed, your score could suffer. Ensure the loan you agree to has payment terms that you're prepared to handle

Credit utilization and consolidation

Using an online loan for debt consolidation could decrease your overall credit utilization ratio (the amount of credit you're using divided by what's available). A lower credit utilization ratios can improve your credit score — experts tend to recommend limiting your credit utilization to 30% of your total available credit.

Choosing the Right Loan

When you're weighing options for personal loans, you'll want to consider:

  • The terms:  An online loan with a reasonable interest rate and low monthly installment payments is a great way to build your credit.
  • Your credit mix:  If you already have one or more personal loans, you may want to look at another option since credit mix is a component of your score. On the other hand, if you have credit cards but no personal loans, a loan will enhance your credit mix.

Alternatives to Loans

If you still want access to funds that will help build your credit, but the terms of a personal loan aren't the most favorable, there are other options.

  • Look for credit-builder loans: These are loans designed to help people with limited or no credit history. Credit builder loans enable you to take out a small loan (often less than $1,000), which is set aside in a savings account or certificate of deposit while you make monthly payments with interest. These payments are reported to the credit reporting bureaus, and once you make all of the payments, you receive the lump sum.
  • Consider a credit card: This could be a card that you qualify for on your own, or if you need support, being added as an authorized user by a family member. Either way, using a reasonable amount of credit on the card and making timely payments is going to work to boost your score.

The Bottom Line

Choosing an online loan you can comfortably make payments on could help to boost your credit score. But be cautious and make sure a personal loan is the right kind of debt before you commit. If you decide you may not be able to be successful in paying off the loan over time, it may be best to hold off on the purchase or seek out a credit-builder loan instead.

Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.




Press Release Service by Newswire.com

Original Source: Can an Online Loan Help You Build Your Credit?

More News

Robert Powell catalogue launched, Retrospective to follow in 2027
Oct 1, 2026
Robert Powell catalogue launched, Retrospective to follow in 2027

KATHMANDUA catalogue on the late Australian artist Robert Powell, who lived in Nepal for 30 years, was launched at The Kalā Salon in Chhaya Center on September 29, ahead of a major...

Helena Law Lan’s horror film legacy; Hong Kong’s Gen Z jeweller: 7 Lifestyle highlights
Oct 1, 2026
Helena Law Lan’s horror film legacy; Hong Kong’s Gen Z jeweller: 7 Lifestyle highlights

We have selected seven Lifestyle stories from the past seven days that resonated with our readers. If you would like to see more of our reporting, please consider subscribing. 1. How Helena Law Lan, 91, became Hong Kong cinema’s grand dame of horror Few figures are as synonymous with Hong Kong horror films as Helena Law Lan, who has been a household name for over half a century. 2. How Chinese first lady Peng Liyuan is a symbol of China’s fashion soft power Chinese first lady Peng Liyuan has...

John Malkovich on His New Film, Shooting on Easter Island, and the Business of Acting
Oct 1, 2026
John Malkovich on His New Film, Shooting on Easter Island, and the Business of Acting

He's performed in 47 countries and appeared in more than 100 films, but could this be the year John Malkovich finally gets his Academy Award? We speak to the renowned actor about his new film, Wild Horse Nine, and life beyond showbiz. The post John Malkovich on His New Film, Shooting on Easter Island, and the Business of Acting appeared first on Business Traveller.

5 of the best things to do in Hong Kong this weekend, October 2-4
Oct 1, 2026
5 of the best things to do in Hong Kong this weekend, October 2-4

The National Day “golden week” break is upon us, and with it comes the familiar dread: packed MTR carriages, huge crowds and a slow-moving tide of visitors. But as always, there are several ways to escape the hordes, whether that is trying experimental gelato, practising poolside yoga or checking out an exhibition of Hong Kong’s beloved neon lights. 1. Ciao! Gelato Fest 2026 The city’s first large-scale Italian gelato festival is back at PMQ for another edition, bringing together 20 brands from...

Sunda New Asian Debuts Culinary Specials for Filipino American History Month
Oct 1, 2026
Sunda New Asian Debuts Culinary Specials for Filipino American History Month

Now with five locations across the US, Sunda New Asian is expanding its culinary horizons this October The post Sunda New Asian Debuts Culinary Specials for Filipino American History Month appeared first on Business Traveller.

Indonesia Launches Nusantara Explorer, A Luxury Sleeper Train Built for Hire
Oct 1, 2026
Indonesia Launches Nusantara Explorer, A Luxury Sleeper Train Built for Hire

KAI's Nusantara Explorer pairs 36 cabin berths with a grand restaurant and lounge The post Indonesia Launches Nusantara Explorer, A Luxury Sleeper Train Built for Hire appeared first on Business Traveller.

Inside the UK and Ireland's best holiday lets for 2026: From an enormous Yorkshire country house to a quirky lighthouse stay - we look at this year's winners
Oct 1, 2026
Inside the UK and Ireland's best holiday lets for 2026: From an enormous Yorkshire country house to a quirky lighthouse stay - we look at this year's winners

Sykes Holiday Cottages has revealed this year's best holiday lets, with winners including a Grade II-listed Lincolnshire lighthouse and a glamping hut complete with an outdoor bath.

Seven Ways to Experience Houston’s Thriving Art and Culture Scene
Oct 1, 2026
Seven Ways to Experience Houston’s Thriving Art and Culture Scene

Houston’s creative side stretches across world-class museums, independent galleries, performing arts venues and colourful public spaces, with a year-round calendar of exhibitions and events adding even more reasons to visit. From exploring one of America’s leading museum districts and catching a performance downtown, to experiencing interactive digital art and watching hundreds of extraordinary art cars take to the streets, here are seven ways to discover the best of Houston’s arts and culture scene.

Toastmasters beyond the podium: When communication Found a Canvas
Oct 1, 2026
Toastmasters beyond the podium: When communication Found a Canvas

What happens when Toastmasters members put down their speech notes, step away from the podium and pick up a paintbrush? For Division B of Toastmasters Nepal, the answer was an even...

WTTC Brings Together More Than 100 Global Speakers for WTTC’s Global Summit
Oct 1, 2026
WTTC Brings Together More Than 100 Global Speakers for WTTC’s Global Summit

The World Travel & Tourism Council (WTTC) has unveiled the full programme for its 26th Global Summit in Valletta, Malta, bringing together more than 100 global speakers for what is the most influential gathering of public and private sector leaders in Travel & Tourism anywhere in the world.

Disgusting Food Museum’s Hong Kong show has bull testicles and more. Is it in good taste?
Oct 1, 2026
Disgusting Food Museum’s Hong Kong show has bull testicles and more. Is it in good taste?

As someone who enjoys savoury, pickled and highly pungent foods, my interest was piqued when I saw that the Disgusting Food Museum had come to Hong Kong. If I loved even the strongest of blue cheeses and stinky tofu, surely I would have a good time at the exhibition. Founded in Sweden in 2018, the museum went viral through a mixture of grotesque fascination and cultural pushback, as critics questioned the fairness of labelling traditional foods – such as the Chinese century egg – as...

14 new Hong Kong restaurants and bars in October, from all-you-can-eat Wagyu to froyo
Oct 1, 2026
14 new Hong Kong restaurants and bars in October, from all-you-can-eat Wagyu to froyo

This month’s round-up spans the city’s most exciting openings, from a South Korean pot rice chain with more than 70 stores back home to a froyo counter tucked inside a Sai Wan launderette. There’s a relocated Michelin-recognised French-Japanese tasting menu in Causeway Bay, a neo-retro rooftop revival in Central and a Cantonese concept that curiously shares its name with a famous Michelin three-star institution. British pub classics land in SoHo, American soft-serve arrives soon and Wagyu takes...

YOUR NEWS, OUR NETWORK.

Do you have Great News you want to tell the world?

Be it updates about your business or your community, you can make sure that it’s heard by submitting your story to our network reaching hundreds of news sites across 6 verticals.

Life Ponds

Life Ponds publishes travel and lifestyle on a daily basis. We believe that Life Ponds will help to solve your problems every time you face a challenge.

Newsletter