Does Taking Out a Loan Improve Your Credit?

If you’ve ever heard that “just getting a loan” can help your credit score, you’re not alone. In this episode of Credit Diaries, part of our Extra Credit series for Financial Literacy Month 2025, Ellen Falbo—Chief Credit Officer at Possible—breaks down the truth behind one of the most common credit myths.

Yes, having a healthy mix of credit can help your score. But borrowing just for the sake of borrowing? That’s a habit worth rethinking. Ellen walks through how credit diversity works, why lenders look at more than just your score, and what to consider before taking out a loan you don’t actually need. Because every loan costs something—and your money could be better used for savings, investing, or even just an ice cream.

Want to improve your credit the smart way? Watch the full video for practical tips on what really matters when it comes to building credit—and how to make debt work for you, not against you.

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Transcription

More in this series

A New Way To Think About Your Credit Score
Is your credit score 640 or 639? It might not matter as much as you think. In this episode of Credit Diaries , Ellen Falbo, our Chief Credit Officer, breaks down credit myths, scoring models and what actually counts for Sue, a Possible member since 2022.

How to Fix Credit Report Errors and Dispute Inaccuracies
Learn how to fix credit report errors and dispute inaccurate information under the Fair Credit Reporting Act. Legal & Finance expert, Daynor, explains your rights and where to start.

Do You Need to Carry a Balance to Build Credit?
You don’t need to carry a balance to build credit. In this quick myth-busting episode, Ellen Falbo, Chief Credit Officer at Possible, explains how credit utilization really works—and how to boost your score without paying interest.

How to Avoid Credit Card Interest Using the Grace Period
Learn how to use credit cards without paying interest. Ellen explains the “grace period,” statement balances, and smart strategies to stay out of debt.

How Credit Card Interest Works
How much does that $500 TV really cost? In this Extra Credit video, Chief Credit Officer Ellen Falbo walks through three common ways people pay off credit cards—and how interest can quietly double the price of everyday purchases.

What Impacts Your Credit Score?
Your credit score can feel like a mystery—because in many ways, it is. In this quick breakdown, Legal & Finance Expert, Daynor, shares what really goes into your score, what improves it, what drags it down, and how to actually check it. Whether you’re just starting or trying to bounce back, this is info worth knowing.

Credit Invisibility: What It Means and How to Fix It
No credit score? You’re not alone. Ellen explains what it means to be “credit invisible” and how to start building credit—even without a loan.