Rick Bormin, Personal Loans Moderator
Yes, a Citibank personal loan does affect your credit score, both when you apply and during the entire time that you are paying the loan off. Initially, a Citibank personal loan will affect your credit score in a negative way, but the long-term impact can be very positive, assuming you repay the loan on schedule.
How a Citibank Personal Loan Affects Your Credit Score
Hard pull: When you apply for a Citibank personal loan, Citibank will do a hard inquiry into your credit history, which will temporarily drop your credit score by about 5-10 points in most cases.
Increased debt level: Taking out a Citibank personal loan will naturally increase the amount of debt that you have. Since your debt level is one of the components of your credit score, you can expect that to have a negative impact initially.
Account diversity: One positive way that getting a Citibank personal loan can impact your score right away is by adding more diversity to the types of accounts you have open. Your "credit mix" is one of the components of your credit score, and the more types of accounts you have, the better - as long as you handle them responsibly.
Payments: The biggest factor in how a Citibank personal loan affects your credit score is whether you pay on time. If you make on-time payments, your score should steadily increase as a result. If you pay late or fail to make payments altogether, you can expect your credit score to drop.
The bottom line is that while a Citibank personal loan does affect your credit score, most of the way that your score changes depends on how responsible you are with the loan. If you'd like to estimate how certain actions might affect your credit score, you can use WalletHub's free credit score simulator
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