Hard credit checks are frequently required when applying for an installment loan, and they temporarily drop your credit score by a few points. Aside from that, if you consistently make your payments on time, installment loans might improve your credit.
Reputable lenders inform at least one of the three main credit agencies, Equifax, Experian, and TransUnion, about on-time payments. Your payment history, which accounts for 35% of your FICO score, is built by making on-time installment loan payments.
Missed or late payments might have serious repercussions. Your credit score might be reduced by up to 100 points for a payment that is 30 days or later. Automatic payments may often be set up with most lenders, relieving you of the responsibility of remembering to make payments.