![]() ![]() Experts are cautious about buy now, pay later and its impact on credit scores "To protect consumer credit scores from immediate negative impact, detailed information related to each BNPL transaction will be stored separately from Experian's core credit bureau data," Experian said in a press release. Both TransUnion and Experian, however, allowed for the possibility that they might do so in the future. TransUnion and Experian will start collecting information about an individual's outstanding BNPL loans, but won't factor it into a credit report. Equifax will be the only one of the three where a BNPL provider can choose to include BNPL loans in the calculation of your core credit score. The three bureaus are taking different approaches when it comes to incorporating the relatively new shopping phenomenon into the financial profiles of credit users. The rise of BNPL led to a pandemic-era spending and debt boom, prompting the the Consumer Financial Protection Bureau to open an inquiry into BNPL firms in December, citing concerns around debt growth, consumer protection laws, and data harvesting. Shoppers sign up for a scheduled repayment plan and pay back the debt in installments. ![]() The services essentially do what they say, which is offer buyers short-term, often interest-free loans to pay for purchases. If you make payments on time, it could boost your credit score if not, it could hurt it, which could in turn affect your ability to obtain a mortgage, credit card, or other loans in some cases.Ī representative for Equifax told Insider that a BNPL loan won't necessarily make or break an individual's credit score, which depends on a mix of payment history and total amount of debt.īNPL loans such as those offered by Affirm, Afterpay, Klarna, and PayPal's "Pay 4" option have been growing increasingly popular over the past few years, especially among Gen Z buyers. That's because the three major US credit bureaus, TransUnion, Equifax, and Experian, will be collecting data on these purchases, according to their press releases. It often indicates a user profile.Īccepting the enticing "buy now, pay later" offer you see while shopping online could start counting toward - or against - your credit score. Account icon An icon in the shape of a person's head and shoulders. ![]()
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