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Installment loans and your credit report

How paying back a loan over several months can affect your credit.

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By

Elizabeth Barry

Updated

Fact checked

Taking out any type of loan can have a positive or negative impact on your credit report. Make all of your repayments on time and an installment loan can strengthen your credit rating. But late or missed repayments show up on your credit report for years, making it difficult to qualify for other types of financing.
If you’re applying for an installment loan, you might want to check your credit report first even if you haven’t ever missed a payment. Sometimes lenders make mistakes that can be easily fixed.

What is an installment loan?

An installment loan is type of financing where you borrow a lump sum of money and pay it back over a period of time, usually between six and 60 months. Lenders typically charge both interest and fees on an installment loan, unlike the fixed fees that come with a payday loan. This type of loan is meant to help finance large purchases, such as buying a car.

How long does an installment loan appear on my credit report?

How long an installment loan appears on your credit report depends on whether you currently have an installment loan and have been on time making payments.

  • If you had an installment loan and it’s been paid in full. The account will remain on your file for up to 10 years from the date of last activity (DLA).
  • If you currently have an installment loan and have made late payments. Late payment history will generally remain on your file for up to 7 years.
  • If you have an overdue installment loan. Accounts considered “not paid” generally remain on your file for up to 7 years.
  • If you had an installment loan that went to a collection agency. Accounts that go to collection agencies are generally listed on your file for up to 7 years from the date the account file became past due.

Compare online installment loans

Check the websites of any providers you’re interested in to confirm they operate in your state of residence.

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Updated regularly
Name Product Filter Values Loan amount Turnaround time Requirements
OppLoans Installment Loans
Finder Rating: 4.7 / 5: ★★★★★
OppLoans Installment Loans
$500 to $4,000
As soon as the same business day.
+18 years old, Receive paychecks through direct deposit, Meet minimum income requirements, Live in eligible state
Comes with the option to change your due date so you won’t fall behind on repayments.
Go to site
More Info
LendYou Short-term Loans
Finder Rating: 2.5 / 5: ★★★★★
LendYou Short-term Loans
$100 to $1,000
Same business day to 1 business day
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
Go to site
More Info
Fast5kLoans Short-term Loans Connection Service
Finder Rating: 3.5 / 5: ★★★★★
Fast5kLoans Short-term Loans Connection Service
$100 to $35,000
As soon as the next business day
Regular source of income, Verifiable bank account, US citizen, Ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
Go to site
More Info
Fig Loans Installment Loans
$200 to $800, varies by state
As soon as the same business day
3 months of direct deposits, $1400 per month income, positive bank account balance
Get an affordable installment loan that comes with no fees, flexible terms and predictable monthly repayments.
Go to site
More Info
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How can an installment loan help my credit?

An installment loan can help your credit score by allowing you to build a positive credit history. All you need to do is make your repayments on time.
A positive credit history shows that you’ve paid off debts on time in the past, making you appear more trustworthy to lenders in the future. It can boost your credit score in a few ways:

  • It can be proof of on-time repayments. Making repayments on time counts for 35% of your FICO credit score and is the most important factor in your credit score.
  • It can add to your credit history. How long you’ve been paying off debt makes up 15% of your FICO score. Some lenders also have requirements for your length of credit history, which they can find by looking at your credit report.
  • It can diversify your credit types. How many different types of debt you’ve repaid can also boost your credit score — it counts for 10%. Just having an installment loan on your report might give you a few extra points.

Look for a lender that reports to credit bureaus

If your installment loan provider doesn’t report to a credit bureau, an installment loan can’t have any impact on your credit score at all. It can still hurt your credit score if it goes into collections — that gets reported to credit bureaus regardless of the lender.
If you’re interested in improving your credit when you borrow, go for a lender like OppLoans or Rise that report to at least one of the three main credit bureaus: TransUnion, Equifax and Experian.

How can an installment loan hurt my credit?

There are a couple ways having an installment loan can hurt your credit:

  • It can be proof of missed payments. Missing a payment after your lender’s grace period not only tacks on fees, it also shows future lenders that you’re not always reliable.
  • It shows up as a credit inquiry. Every time you apply for credit, be it a loan or credit, it shows up as a credit inquiry on your report and counts for 10% of your credits core. Even if you don’t get approved. This knocks your credit score down a few points, which you can make up with on-time repayments.
A missed or late repayment will follow you around for years. That’s why it’s important to make sure you can comfortably afford the loan amount, terms and interest rate before you apply for an installment loan. You can use our monthly repayments calculator to find out how much you’ll pay on a loan.

4 tips for paying back an installment loan

  1. Stick to a budget. Setting aside funds each month for your repayments can help ensure you make repayments on time to boost your credit score.
  2. Sign up for autopay. This can help you avoid accidentally miss a repayment just because you forgot. Some lenders also offer a discount.
  3. Consider repaying early. You can save on interest by paying back your loan early as long as your lender doesn’t charge a prepayment penalty.
  4. Reach out if you need help. Think you might miss a repayment? Talk to your lender as soon as possible. Some might be able to work with you to avoid that negative mark on your credit report by adjusting your loan term.

How online installment loans work

Where can I check my credit report?

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Updated regularly
Name Product Starting price Trial period Credit scores Credit monitoring Credit reports Update frequency
SoFi Relay
SoFi Relay
$0
No
TransUnion
Yes
TransUnion, Equifax, Experian
Weekly
Go to site
TransUnion Credit Report
TransUnion Credit Report
$24.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
TransUnion credit score, monitoring and identity theft insurance.
More Info
myFICO
myFICO
$19.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
Get quarterly access to your most widely used FICO® Scores and a 3-bureau credit report.
More Info
Equifax Small Business Credit Reporting
Equifax Small Business Credit Reporting
$99.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Annually
Monitor your key business relationships to protect your company from losses.
More Info
GoFreeCredit.com
GoFreeCredit.com
$24.95
7 days
TransUnion
Yes
TransUnion
Monthly
$1 for a seven-day trial to get access to your credit score and credit report from TransUnion.
More Info
Credit Karma
Credit Karma
$0
No
TransUnion, Equifax
Yes
TransUnion, Equifax
More Info
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1 - 4 of 4
Updated regularly
Name Product Monthly Fee BBB Rating Customer Support Cancel Anytime call to action
Kikoff
Kikoff
$5
C+
Yes
Go to site
Self Credit Builder Account
Self Credit Builder Account
$25
B
Phone, Email, Online Chat
Yes
Go to site
More Info
Save money and build credit with a secured-installment loan that you can access after 12 or 24 months.
Credit Firm Professional Credit Repair
Credit Firm Professional Credit Repair
$49.99
C+
Phone, Email, Mail
Yes
Go to site
Professional credit repair service that can help you create a step by step action plan. Cancel anytime.
The Credit People
The Credit People
$79
C+
Phone, Email, Mail
Yes
Go to site
More Info
Professionals work with you to clean up your credit and raise your credit scores. Cancel anytime.
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There’s an error on my credit report. What can I do?

If you find an error on your credit report, make sure that it’s showing up on all of your credit reports — not all bureaus are in contact with each other. Gather information showing that the report is incorrect before reaching out to your lenders.
Typically, lenders ask you to send documentation to prove there was an error. If they accept your claim, they’ll reach out to the credit bureau to correct the error.
How to fix a mistake on your credit report

How long do installment loans stay on my credit report?

On-time payments generally stay on your credit report for up to 10 years. Late payments, defaults and other negative marks often stay on your credit report for up to seven years.
Credit inquiries can stay on your credit report for between one and seven years, depending on where you live.
How your credit report works

Bottom line

Applying for an installment loan always has an impact on your credit report. Whether it helps or hurts your credit rating depends on how you repay your loan. Pay it back on time and it can boost your score for up to 10 years.
But even missing a repayment by a few days can follow you around for up to seven years. Start by checking out our best picks for installment loans.

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