Personal Loans
Considering applying for a Best Egg personal loan and want to know how it could affect your credit? Look no further – in this article, you’ll learn about the different types of credit inquiries, when an inquiry impacts your credit score, as well as a couple of ways a personal loan could help you improve your credit score.
Soft and Hard Inquiries
When you apply for a Best Egg personal loan, a soft credit inquiry (or pull) will appear on your credit report. This soft inquiry does not impact your credit score. Understand that after completing your application, if you’re approved, you’ll be able to see the APRs, interest rates, loan terms and loan amounts of your offers with no obligation to commit and no impact to your credit. In other words, there is no harm involved with checking your rate and seeing what you could be approved for.
If you choose to accept a Best Egg personal loan offer on the other hand, a hard inquiry (or pull) will be generated on your credit report. This hard inquiry may impact your credit score. Again, this will only happen if you’re presented with loan offers and you decide to accept one – your credit score will not be impacted for checking your rates and offers.
Want to learn more? Take a look at our article “The Difference Between Hard and Soft Inquiries”.
How a Personal Loan Could Improve Your Credit Score
When managed responsibly, a personal loan may help you improve your credit score. Here are a couple of examples of how you could better your credit score with a personal loan.
Positive payment history
Although accepting a Best Egg Personal Loan offer could impact your credit in the short-term, making consistent on-time payments on your loan may improve your credit score and help you build credit.
Your payment history makes up an incredible 35% of your overall FICO credit score, so the importance of this factor can’t be understated – just one late payment could cause a significant drop in your credit score (we’re talking over 100 points), even if you’ve never missed a payment before. As long as you’re making on-time and in-full payments on your loan, you’ll be establishing a positive payment history which could improve your credit score.
Could improve your credit mix
Having different types of credit on your report contributes to your credit mix, a factor that determines 10% of your FICO credit score. If the credit you have is primarily of the revolving type (think credit cards), adding an installment loan like a personal loan to your mix could improve your credit score.
If you want to learn more about how to make smart financial decisions when it comes to credit, our robust resource section “Understanding Credit” can help you get started.
See what you qualify for
Looking for some extra funds to consolidate debt, refinance your credit cards, pay for unexpected expenses, or just about anything else? Find out what type of rates you qualify for by clicking “apply now” on our personal loans page with no impact to your credit score.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.