Installment loans can help improve your credit score by adding on-time payment history to your credit report. They can also broaden your credit mix, which is a credit score factor that considers the types of accounts you own, if you primarily used credit cards in the past.

Does an installment loan hurt your credit?

Installment loans will not negatively affect your score as long as you are paying on time. That's because when you first get a loan, credit agencies understand that the loan balance will be relatively high during the beginning of its lifetime.

Is installment debt bad?

Installment loans can help your scores if: You pay on time. Installment loans can help build credit if you are consistently paying on time and the lender reports your activity to one or more of the credit bureaus.