Does OneMain Financial Affect Your Credit Score?

How OneMain Financial Can Affect Your Credit Score

Taking out a personal loan with OneMain Financial directly impacts your credit. The entire loan lifecycle, from application to final payment, is reported to credit bureaus and can influence your score.

1. Application Inquiry: When you apply for a loan, OneMain typically performs a hard credit check. This inquiry is recorded on your credit report and can cause a small, temporary dip in your score.
2. New Credit Account: Upon approval, the loan appears as a new account on your credit report. This increases your overall debt and can lower the average age of your credit history, potentially causing another slight, temporary decrease.
3. Payment History: Your monthly payments are reported to the major credit bureaus. Consistently making on-time payments builds a positive payment history, which can significantly improve your credit score over the life of the loan.
4. Missed Payments: Conversely, any late or missed payments are also reported. This negative information can severely damage your payment history and lower your credit score, making future borrowing more difficult.

How Much Will OneMain Financial Affect Your Credit Score?

Taking out a personal loan with OneMain Financial can influence your credit score in several ways. Here are the key factors to consider before you apply.

• Hard credit inquiry. Applying for a loan results in a hard inquiry on your credit report. This can cause a temporary, minor dip in your credit score for a short period.
• Payment history. Consistently making on-time payments can help build a positive credit history and improve your score. However, late or missed payments will be reported and can significantly lower it.
• Credit mix. An installment loan can diversify your credit profile, which makes up a portion of your score. This can be beneficial if you mostly have revolving credit like credit cards.

How You Can Avoid OneMain Financial Affecting Your Credit Score

Use the Prequalification Process

Checking for prequalification is a smart first step. This process generally involves a soft credit inquiry, which lets you view potential loan offers and rates without affecting your credit score. It’s a risk-free way to see what OneMain Financial can offer you.

Make Consistent, On-Time Payments

If you proceed with a loan, the most critical factor is your payment history. Consistently making on-time payments can positively influence your credit. Conversely, late or missed payments are reported to credit bureaus and will lower your score, so diligence is essential.

Shop for Loans Strategically

When comparing lenders, submit your applications within a short window, like 14 days. Credit scoring models often treat multiple hard inquiries for the same type of loan as a single event, which helps minimize the negative impact on your credit score during your search.

Ways to Improve Your Credit Score

Improving your credit score is always within reach, though it requires consistent effort and patience. With the right strategies, you can see meaningful improvements to your creditworthiness in as little as three to six months.

• Monitor your credit reports. Regularly check your reports from all three major bureaus for inaccuracies, as disputing errors is one of the fastest ways to boost your score. You are entitled to free reports from AnnualCreditReport.com.
• Pay your bills on time. Your payment history is the most significant factor in your score, so set up automatic payments to ensure you never miss a due date.
• Reduce your credit utilization. Aim to use less than 30% of your available credit by paying down balances on your credit cards.
• Limit hard inquiries. Avoid applying for too much new credit at once, as each application can temporarily lower your score. When shopping for a loan, submit your applications within a short window to minimize the impact.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards (revolving credit) and auto or personal loans (installment loans).

The Bottom Line

Applying for a OneMain Financial loan involves a hard credit inquiry, which can temporarily lower your score. However, consistent, on-time payments can help improve your credit history over time.

Frequently Asked Questions

Does OneMain Financial report to all three credit bureaus?

Yes, OneMain Financial reports your loan payments to all three major credit bureaus—Equifax, Experian, and TransUnion. This activity directly influences your credit history and score.

Will pre-qualifying for a OneMain Financial loan hurt my credit score?

No, checking for pre-qualified offers only requires a soft credit inquiry. This type of check does not impact your credit score in any way.

How can a OneMain Financial loan help my credit?

Making consistent, on-time payments on your loan demonstrates financial responsibility. This positive payment history is reported to credit bureaus and can help improve your credit score.