Will Installment Loans Raise Credit Score??

[skychick1]

Hello All,

Confused, and would appreciate any assistance.  Explanation for my credit score reflects that I need more diverse credit.  Would a 6 month installment  loan help raise my credit score? My credit union offers these, and wondering if this would be a good move.

Thank you in advance for your knowledge!

[Anonymous]

If you have no other installment, then yes.

[skychick1]

Thanks once again, Mauve.  You are a wealth of information!! 

I love this forum!!

[Anonymous]

Honestly, almost everything I know, I got from here.  I've just seen this question asked before.  I think mix of credit contributes to 10% of the scoring algorithm, if I remember right.  Check in with "Understanding FICO scoring", they'll know more.

[Anonymous]

Installment loans, other than for payment history and AAoA have little effect on your FICO score.  The points you would get for utilization are very minimal.

[skychick1]

Thank you!  I think at this point it will not hurt my score-I really need diversity.  We shall see.......

[Anonymous]

It will not hurt your score at all.  And with an installment loan you will be getting a good mix of credit and may see an increase.

[skychick1]

Yay!!  Thanks

[Anonymous]

With a temporary ding for the inquiry - which affects your score for a year and remains on your report for 2

[creditbroke]

My installment loan took me from the 5's to 6's by itself in exactly a year. Then I added a secured cc and a Best Buy card. Also recently I was added to my parents Jcpennys card to bring up my AAoA. My scores are in the mid 7's with only a years payments and couple cc accounts.

So, the loan can help you, but you should stretch it to 18 months IMO.