Do installment loans help your credit? This question is about Best Installment Loans of March 2023

Do installment loans help your credit?

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This question is about Best Installment Loans of March 2023

Grace Enfield, Content Writer

@grace_enfield • 03/30/22 This answer was first published on 03/30/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Yes, installment loans help your credit as long as you pay the bills on time. Each month, the lender will report positive information to the credit bureaus if you stay current on the loan, which will improve your credit score. Plus, if you already have a credit card, adding an installment loan improves your credit mix, which also helps your credit score.

Just bear in mind that your credit score may initially drop by about 5 - 10 points when you apply for an installment loan because of the hard pull on your credit report. Your increased debt level after receiving the loan may also have a negative impact on your credit score initially. A few months of on-time payments should help you bounce back from these negatives, though.

To get an idea of how an installment loan may affect your credit in particular, you can try WalletHub’s free credit score simulator. You’ll also be able to track changes to your credit score on a daily basis when you join WalletHub for free.

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