Rural Microcredit is used as a poverty alleviation tool for the needy households. Pakistan Poverty Alleviation Fund in collaboration with Sarhad Rural Support Program introduced Community Livelihood Fund (CLF), experimenting some new methods, for investment in productive activities to improve well-being. This study analyzes the impact of CLF microcredit in improving well-being of rural households in district Swat of Khyber Pakhtunkhwa Pakistan. The study uses CLF data for the year 2014 for 440 borrowers and non-borrowers of microcredit. WLS regression method has been employed to see the impact of microcredit and other socio-economic and demographic variables on the household well-being. It was found that CLF microcredit improves the well-being of the rural households in district Swat. The outcome variable, household well-being is positively affected by household size, age, child school attendance, employment and marital status, however, negatively by age dependency burden. Moreover, level of education and ownership of land and livestock have insignificant impact on household well-being. Besides, microcredit was utilized to improve the livestock. Based on our empirical findings, it is implied that CLF microcredit is successful in improving the well-being of the rural households. Hence it is suggested that CLF microcredit should be extended to other areas, and provision of training through professionals for livestock improvement should be focused in order to ensure the efficient use of microcredit. Supervisor:- Dr. Anwar Hussain