A personal loan doesn't factor into your credit utilization because it's a form of installment credit—not revolving credit. But using a personal loan to pay off revolving-credit debt could lower your credit utilization.
Do student loans count as credit utilization?
Credit utilization ratio
But student loan debt is considered installment debt because of its regular monthly payments. Installment debt has a smaller impact on your credit utilization ratio. It still impacts your score to some degree, especially early on when the bulk of your student loan debt is still outstanding.
What factors go into credit utilization?
Five major factors have an influence on your FICO credit score, the most commonly used credit scoring model:
- Payment history (35%)
- Level of debt/credit utilization (30%)
- The age of credit (15%)
- Mix of credit (10%)
- Credit inquiries (10%)4.
