Buy Now, Pay Later May Soon Affect Your Credit Score
“Buy now, pay later” (BNPL) services have exploded in popularity, offering a flexible way to pay for just about anything—from laptops to lunch. But soon, your use of these installment plans could show up on your credit report and affect your credit score.
More than half of Americans have used BNPL services in the past year, with many preferring them over traditional credit cards, according to a recent study by Ascent. These services typically let users split purchases into four equal payments over time, interest-free—at least if payments are made on time.
Until now, BNPL loans have mostly been invisible to credit bureaus. That’s changing. The three major credit bureaus—Experian, Equifax, and TransUnion—are preparing to factor BNPL usage into credit scores. TransUnion is even teaming up with FICO to make it happen.
This shift could be a good thing—if you manage your payments well. Financial expert Gene Marks explains that responsible repayment could help build your credit history, especially for people without access to credit cards or loans. But it’s a double-edged sword. Miss a payment, and the negative mark could hurt your credit more than before.
One challenge is figuring out how these short-term loans fit into credit models, which typically favor long-term credit history. So far, Affirm is the only major BNPL provider sharing data with credit bureaus, and even then, some of that information remains separate from your main credit profile—for now.
Younger shoppers, especially those under 44, are driving the surge in BNPL usage, often using it for everyday essentials like groceries. But experts warn that missed payments can come with steep fees, and unlike credit cards, BNPL services don’t offer the same consumer protections.
