Q: Is it okay to split my loan to improve my credit score? I have $9,000 borrowed from a $10,000 credit limit. What if I get three $3,000 loans with a $10,000 limit each?

A: The idea of decreasing your credit utilization rate is good. The less you borrow from your available credit limit, the better it is. So, I see where you’re going. 30% is better than 90%.

However, applying for 3 new loans is where it gets tricky and risky. One – you don’t know if you’ll be approved for $10,000 on 3 new loans. Two – applying for 3 new loans and possibly getting denied will negatively affect your credit score.

The best thing to do is work on paying down your existing $9,000 balance. Paying it down and giving yourself a wider gap between the balance and the available credit limit is the prudent thing to do.