CD loans do build credit if you use them wisely. With its low risk and low interest rate, a CD loan can offer a good route for establishing or rebuilding credit. However, using a CD-secured personal loan to improve your credit score will work only if you make the payments in full and on time.
Even though the lender can seize your CD if you default, it will still report your delinquency to the credit bureaus Experian, Equifax and TransUnion. If you default, you could lose your CD and damage your credit rather than improve it.
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