There is some truth to this. I have lived essentially debt-free for 10 years now. I have a few credit cards with no balance on them, and occasionally will finance a car, which gets paid off in 50-60% of the term of the loan.
Over this time, all other things have been equal with my credit history, but each time I take out an installment loan, my FICO score goes up 20 - 30 points over 3-4 months. Once the loan is paid off, it drops down again over about a year.
I bought a new motorcycle over the winter, and financed part of it. FICO score is on the rise again! But in a year, it will be falling again, as the loan will be paid off.
Also, a few years ago, during the rash of bank bailouts, I had several credit cards cancelled for 'lack of activity'. I'm sure it was the banks trying to improve their balance sheets to make it look like they did something with the bailout money other than steal it.