Benefits

• You gain benefits from using different types of credit, including a good mix of installment accounts and revolving credit lines, MSN Money columnist Liz Pulliam Weston advises. Mortgages and vehicle loans are common examples of installment loans, but a small loan also counts in the same category if you cannot afford a large financial obligation. Borrowing a modest amount of money adds variety that helps your credit score if your only other accounts are credit cards.
  
  

Circumstances

• Taking out a small loan to help your credit is especially useful in certain circumstances when your score can use a boost. Pulliam Weston explains that installment loans, mixed with secured or unsecured credit card accounts, help rebuild good records after bankruptcy. Such loans also help you establish credit when you are just starting out financially. In both circumstances, you help your credit score if you always pay on time because 35 percent of the score comes from your payment history, according to MyFICO. You also boost the 10 percent that comes from using a variety of account types.
  
  

Considerations

• Your small loan hurts your credit if you make late payments or even skip some installments completely. The finance company reports this to the credit bureaus, where it gets added to your credit reports and influences your credit score. Do not take out a loan if your repayment ability is questionable. Payment delinquencies hurt you more in the FICO scoring formula than a lack of account variety.
  
  

Reporting

• A responsibly handled loan raises your credit score only if the finance company reports it to the TransUnion, Experian and Equifax credit bureaus. Otherwise, other lenders never see it and it does not affect your score. Verify the loan's presence on your credit reports by ordering copies from the Annual Credit Report website, which is the only official free report source. Call your lender if you do not see the loan or if it shows up but the information is incorrect. Ask for the loan to be reported or for correction of any errors. Mistakes also can be disputed directly with the credit bureaus.