Can a Personal Loan Help Build One’s Credit History?

iQuanti: If you’ve ever tried to borrow money, like taking out a personal loan, you know that your credit history and credit score can play an important role. This is because some lenders use your credit history to gauge your riskiness as a borrower. Luckily, you can still get a personal loan with no credit history and can even use this loan to build your credit. If you’re looking to build your credit history, here’s what you need to know about and if taking out a personal loan can help.
How does credit history work?
Your credit history is a log that tracks your ability to repay debts. And it has a huge influence on your credit score because it tracks important aspects that create your score, like your payment history, total debt, and the types of accounts you have open. There are multiple parts to your credit history, including: 
To view your credit history, you can download your credit report for free once each year from each of the three major credit reporting bureaus: Experian, Equifax, and TransUnion.
How does credit history impact credit score?
Building credit history is essential because it has a direct impact on your credit score. Your score is made up of 5 parts: 
How can a personal loan help build credit history?
A personal loan can certainly help build your credit history, but you’ll need to ensure that you’re making timely payments consistently for the personal loan to have a positive impact. A personal loan can build your credit history in multiple ways, including: 
The bottom line
Building credit history is essential for when you want to take on debt in the future. And taking out a personal loan can help build your credit history by diversifying your credit mix, extending your length of credit history, and creating a timely payment history. But you’ll want to be sure to make all loan payments on time and in full to ensure that your personal loan will reflect positively on your credit history.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.