How much does a personal loan affect your credit score?

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A personal loan can help or hurt your credit rating depending on these factors. (iStock)

Outstanding personal loan balances hit a record $305 billion last year, according to a study from credit bureau Experian. The report also found that personal loan debt is growing at a faster rate than auto loan, mortgage, credit card, and student loan debt, with the average balance of a personal loan clocking in at $16,259.

Still, taking out a personal loan can be a smart decision for some consumers, particularly for people who are going to use the money to consolidate high-interest debt at a lower interest rate, make necessary home repairs, or cover an emergency medical bill. Credible can help compare personal loan companies (and, hopefully, land you some of the lowest rates for what you’re looking for).

THE BIGGEST MISTAKE TO AVOID WHEN TAKING OUT A PERSONAL LOAN

The caveat: Taking

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