Applying for and taking out an installment loan can impact your credit in several ways.
The application could require a hard inquiry — when creditors review your credit report — which can hurt your scores. (Credit Strong accounts don’t require a hard inquiry).
A new account will also decrease your average age of accounts at first, which can hurt your scores a little. However, over time, the new account can help your credit by increasing your average age of accounts and adding your on-time payments to your payment history.
If you don’t already have an installment loan on your credit report, the new account can also add to your credit mix, which can help your scores.
Most importantly, making on-time payments on your new loan can help you build a positive payment history and greatly improve your credit.
In the long run, an installment loan could help or hurt your credit depending on if you make your payments on time.