Does buy now, pay later affect your credit score?

We asked all the major buy now, pay later providers in the UK, and found a credit score lottery.

Depending on which buy now, pay later (BNPL) provider you pick, using this type of unregulated credit can impact your credit report and even your credit score. BNPL services operate differently, and it’s all going to change. Here’s the lowdown on each. Below the table, we’ve covered what else you need to know.

Klarna logo
(Pay in 30, Pay in 3)
Laybuy logoClerpay logoSplitit logoFlava logoDividebuy logoPayl8r logoZilch logo
(0% at eligible stores)
PayPal logo
(Pay in 3)
Late payment fees for BNPL£5£6£6£0£3.99 (7 days grace period then £3.99 per week)£0£5 or £15£0£0
When late fees are charged7 days after the due date.Missed payments: £6 each week (max £24). Account frozenOrders below £24: late fee of £6. Orders £24 or more: £6 after due date and £6 if unpaid 7 days later. Capped at the lower of 25% of the purchase price or £36n/a7 days after each due date. Account frozenn/a28 days after the first due date: £2.50 for each SMS/email reminder (3 max); £5 for a failed payment; £15 for a missed scheduled paymentn/an/a
Credit or affordability checks upfront?
Shares data with CRAs?Yes, as of June 2022Yes since 2018NoNoNoYesYes, since the startYes, since April 2022Yes, only CRA can see it. Public reporting due 2023
CRAs it reports toExperian and TransUnionExperiann/an/an/aTransUnionEquifaxExperian; will add Equifax and TransUnion during 2022Refused to say, but 2 out of TransUnion, Equifax, Experian
Data it shares with CRAsPayments, late payments, missed paymentsAll data including missed paymentsn/an/an/aPayments, missed payments, defaultsPurchases, missed paymentsLimit, usage, payment statusPurchases, payments, missed payments, defaults, payment arrangements plans, settled accounts
Can using it affect credit score?Not yet, but Experian and TransUnion are working towards thisNo, but this will changeNoNo – uses consumers’ existing credit on credit cardNoYes if user misses a payment or defaultsYesYes, as of Jan 2023Not yet but will do
Last resort for missed paymentsDebt collection agencyDebt collection agencyDebt collection agencyUser must speak to their card provider or update their credit card details£3.99 per week and no further actionRefused to sayFailed to answerBorrowing frozen; user given contacts for debt advice charitiesDebt collection agency

How can buy now, pay later affect my credit report and score?

Most BNPL providers in our research share information about payments you’ve made, or missed, with credit reference agencies (CRAs) and this goes into credit reports.

CRAs – also known as credit bureaux – are the bodies which keep a record of every adult’s history of borrowing money and paying it back. If you apply for credit, lenders can look at this record to decide whether you’re likely to repay on time. So it’s important to keep up with your BNPL instalments – having multiple missed payments in your credit report could be damaging if, say, you apply for a loan or a mortgage. It could be the difference between getting it and being rejected. Or you could be accepted, but at a higher rate of interest.

CRAs also create your credit score. Some BNPL providers told us the data they share with CRAs can affect credit scores. Zilch announced this in January 2023. Other BNPL providers said that it will happen, but not yet. While 3 providers said they don’t share the data with CRAs at all.

CRAs say they’re working on using all BNPL data shared with them in credit scores and they expect to roll this out in late 2023 or 2024. When this happens, it’s likely that it will be retrospective – in other words, missing BNPL payments now could end up affecting your credit score in the future, even if it doesn’t affect it right now.
If you make your repayments on time, and your BNPL provider shares this data with a CRA, this could be helping you to build a positive credit history, according to Klarna. A positive history could help you if you then go on to apply for credit with another lender. So there could be benefits to using a provider that’s sharing data, as long as you repay on time.

When will credit reference agencies use BNPL in credit scores?

CRAs say they’re working out how best to use all BNPL data in credit scores, and this could be implemented at the end of 2023 or later. But even the BNPL data they get that’s currently not affecting credit scores is visible in your credit report, meaning lenders can see it. Based on this data, a lender could decide to reject you if you’re applying for a credit card or a loan. Or it could help you get approved, if you always repay on time. For our research, we contacted several CRAs, including Experian, which is one of the biggest.

Experian told us: “A consumer’s BNPL activity over the next 18 months will be recorded on their credit report and seen by lenders, so has the potential to influence lending decisions. It’s too soon to predict how historical BNPL agreements will be used in credit scoring, ahead of the analysis we’ll be undertaking.”

Are all BNPL transactions and payments visible on my credit report?

That depends on which BNPL provider you’re using. Klarna and Laybuy transactions are visible, for example. PayPal says they’re not visible yet but they will be. Some providers, such as Clearpay and Flava, aren’t sharing this information with CRAs at all currently.

Can BNPL affect my chances of getting a loan or a credit card?

Yes, if your BNPL provider is sharing information about payments you make, or miss, with a CRA then this will go in your credit report and lenders can typically see it.

PayPal is sharing data about Pay in 3 customers with CRAs but lenders can’t see the information yet. This will change, though.
None of the BNPL providers we contacted does a hard credit check when you apply for credit. Even Laybuy, which used to do this, has stopped and now does only a “soft” check, which other lenders can’t see on your credit record.

Some lenders view your payment history via Open Banking, and seeing your BNPL transactions that way when you apply for credit, according to sources we spoke to during our research.

Does Klarna affect your credit score?

Your credit score will be affected at some point if you use Klarna to pay for things. That’s because it shares information with the credit reference agencies, Experian and TransUnion, and has done so since June 2022.

Klarna shares information about your payments, including missed or late payments. Although it said using it at the moment won’t impact your credit score, Experian and TransUnion are working towards using Klarna data in credit scores. This is likely to start happening in 2023. Klarna also charges late payment fees of up to £5.

Does Clearpay affect your credit score?

Clearpay said it doesn’t share information with credit reference agencies. Therefore it currently doesn’t have a direct impact on your credit score and information about any payments you make with Clearpay won’t affect your credit score.

It also does not perform any credit or affordability checks upfront and has a £6 late payment fee.

Does Zilch affect your credit score?

Using Zilch can affect your credit score, as of January 2023.

Zilch does share information with all three of the main credit reference agencies and has done so since 2022. The information shared is to do with your limit, how you use Zilch and your payment status.

It doesn’t charge any late payments fees and performs upfront affordability and credit checks.

Does PayPal affect your credit score?

PayPal’s BNPL service, Pay in 3, which was launched in 2020 allows you to split a payment into three. It said it shares information with credit reference agencies but only the agencies see the data at the moment. It also said it passes on data for two of the main three agencies, but didn’t say which 2.

The information shared includes: purchases, payments, missed payments, defaults, payment arrangements plans, settled accounts. Using Pay in 3 will affect your credit score in the future. It does perform upfront affordability and credit checks and doesn’t apply late payment fees.

What else do I need to know?

BNPL agreements aren’t regulated but the UK government wants to bring in regulation to protect consumers; it could publish draft rules in mid-2023 and then there would be a consultation.

Currently, you can’t take a complaint to the Financial Ombudsman, and there are no set rules on the information BNPL providers must give you upfront. This makes it hard to know what late payment fees there are, and when you might be charged them. With credit cards and loans, there are rules about this.

The financial watchdog, the Financial Conduct Authority (FCA), warned the BNPL sector in 2022 about misleading adverts, saying that even though agreements weren’t regulated, ads still had to comply with advertising rules. The FCA said consumers could be misled; it had seen ads that emphasised the benefits of BNPL but played down risks such as the consequences of missing payments, information about late fees, and the effect on your credit report.

Bottom line

Millions of consumers in the UK are using BNPL. More retailers, and more providers, are offering it – even high street banks.

This type of credit offers an opportunity to build a good credit history, but for many people, it’s been disastrous. In 2021, Citizens Advice revealed that 1 in 10 BNPL shoppers had been chased by debt collectors, and consumers had paid £39 million in late fees over the previous year.

Finding the information for this guide was a battle. Several providers’ websites are confusing, unclear and, in some cases, contradictory. It’s no surprise that the regulator is keen to step in, but in the meantime, the industry could do a far better job of telling you what you’re signing up for.

Read about how different factors can affect your score

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

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Liz Edwards has been a consumer writer and editor for more than 20 years. She led award-winning teams at the campaigning publisher Which?, and has covered a range of consumer rights and personal finance topics including pensions, credit, banking and insurance. Liz has appeared frequently in national media such as The Sun, Metro, HuffPost and The Independent. She loves to cut through waffle to give consumers the real lowdown. And she loves puns. See full bio

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