![]() ![]() ![]() The research highlighted some of the dangers BNPL schemes pose to shoppers not familiar with credit or choosing to spread out repayments. 'However, if retail credit is used sensibly and repaid on time, it can actually help people strengthen their credit history and improve their score.' 'For example, if you take out credit and then miss the repayment deadlines, you could end up with negative information on your credit report that will adversely impact your creditscore. It stressed that if used properly, these schemes won't hurt your credit rating, and in some cases could even strengthen it.Īn Experian spokesperson said: 'It's always important for people to carefully check what they're signing up for. We asked Experian, one of the UK's biggest credit reference agencies, if people should steer clear of BNPL schemes. You're unlikely to have damaged your credit score if you've adhered to the terms and conditions of your BNPL scheme.īut if you've missed repayments or failed to repay what you owe, the firm you made an agreement with may have reported it to a credit reference agency (CRA) who would have noted it on your credit report. Will using BNPL schemes damage your credit rating? Find out more: credit reports explained.This information will be visible to lenders and could mean you could find it difficult to get approved for future credit, such as a loan or mortgage. Missed payments or failure to pay back what you owe (known as defaulting) can be noted on your credit report and the mark can stay there for six years. Using a credit card, store card or schemes like Laybuy, Clearpay or Klarna can damage your credit score if you miss a payment and fail to repay what you have borrowed. Worryingly, the research found that two fifths were unaware BNPL schemes could impact their credit score. Find out more: how to check your credit score for free.The research found young people aged 25 to 34 are particularly dependent on BNPL with a third using the scheme during the past year and four in 10 reporting their score had suffered a hit. Of those, one in five say it has negatively impacted their credit score. One in five shoppers have used a BNPL scheme over the past year, according to a Compare the Market survey of 2,096 people. Your data will be processed in accordance with our Privacy policy This newsletter delivers free money-related content, along with other information about Which? Group products and services. ![]()
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