Can personal loans build credit?

Personal loans can build credit. The two biggest factors in the popular credit scoring formulas are payment history (35% of the total) and amounts owed (30%). As you establish a track record of making your payments on time every month, it can greatly help build your payment history. And, as you make your payments and the principal balance of the personal loan declines relative to its original amount, the “amounts owed” category can see a positive impact as well.