Installment Loan
A loan repaid in fixed monthly payments (installments) over a set period of time. Examples include mortgages, auto loans, student loans, and personal loans. Unlike revolving credit, installment loans have a fixed balance that decreases with each payment.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Revolving Credit
A type of credit where you can borrow repeatedly up to a set limit, repay, and borrow again. Credit cards and lines of credit are revolving. Your credit utilization ratio — a major FICO factor — only applies to revolving credit accounts.
- Mortgage
A loan used to purchase or refinance real estate, where the property serves as collateral. Mortgages are installment loans with terms typically ranging from 10 to 30 years. Missing mortgage payments can lead to foreclosure. Minimum credit scores vary by loan type (FHA: 500, conventional: 620).
Frequently Asked Questions About Installment Loan
What does Installment Loan mean?
A loan repaid in fixed monthly payments (installments) over a set period of time. Examples include mortgages, auto loans, student loans, and personal loans. Unlike revolving credit, installment loans have a fixed balance that decreases with each payment.
Is Installment Loan important for my FICO® score?
Understanding Installment Loan helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.