Do Buy Now, Pay Later Services Affect Your Credit Score?

Buy Now, Pay Later (BNPL) services offer an alternative to traditional credit. They allow immediate acquisition of goods or services with a small initial payment, then settling the remaining balance through fixed installments over a short period, often interest-free if payments are made on time. BNPL’s popularity has surged, reflecting consumer demand for flexible payment options, especially for online shopping.

Reporting Practices of BNPL Providers

BNPL providers’ reporting practices to credit bureaus vary significantly, influencing whether BNPL activity appears on a credit report. Historically, most providers did not report user activity to major credit bureaus unless an account went to collections. On-time payments didn’t build credit history, but missed payments could negatively impact a score if debt was sent to collections.

Some major BNPL companies now furnish data to credit bureaus. Affirm, for example, began reporting all BNPL transactions, including “Pay-in-4” plans and longer-term loans, to Experian and TransUnion in April 2025. Experian also developed a system to include BNPL accounts on credit reports to enhance transparency.

Other providers, like Klarna and Afterpay, express concern that reporting short-term BNPL loans could harm consumers’ credit scores, even with on-time payments. They are not yet reporting this data in the U.S. and advocate for clearer guidelines. The Consumer Financial Protection Bureau (CFPB) emphasizes consistent and accurate reporting of both positive and negative BNPL data.

How BNPL Activity Influences Credit Scores

Reported BNPL activity influences credit scores positively or negatively. Payment history, a primary factor in credit scoring models (35% of a FICO Score), means consistent, on-time payments on reported BNPL accounts build positive history, helping improve scores, especially for those with limited credit history.

Conversely, late or missed BNPL payments, if reported, harm credit scores. A delinquent BNPL account sent to collections appears on the credit report, causing a score drop that remains for up to seven years. While many BNPL applications use soft inquiries, some longer-term BNPL loans may involve a hard inquiry, causing a temporary score dip.

Opening multiple BNPL accounts in a short period could affect credit scores. New FICO models aim to aggregate BNPL loans, but increased new accounts could still influence the “new credit” factor. Most BNPL loans are short-term, not significantly contributing to credit history length, and frequent account opening/closing could cause short-term score fluctuations.

Factors Determining the Extent of Credit Impact

BNPL activity’s impact depends on the specific credit scoring model and individual credit profile. Models like FICO Score and VantageScore may treat BNPL data differently. FICO introduced new models (FICO Score 10 BNPL and FICO Score 10 T BNPL) to incorporate BNPL data, available to lenders in fall 2025. These models aggregate multiple BNPL loans to avoid penalizing consumers for opening several short-term accounts.

An individual’s existing credit profile plays a significant role in BNPL’s impact. For consumers with limited credit history, reported on-time BNPL payments can be beneficial in establishing a positive credit record. For those with an established credit history, the impact may be smaller. BNPL arrangement type also influences categorization; “pay-in-4” plans are common, but longer-term installment loans may be reported like traditional installment loans.

Credit bureaus are adapting to BNPL data. Experian includes BNPL accounts on credit reports. TransUnion currently makes BNPL data visible only to the consumer, not for credit score calculations, though this could change in the future. Widespread integration of BNPL data into credit scoring models by all three bureaus will provide a more comprehensive picture of a consumer’s financial obligations and payment habits.

Strategies for Responsible BNPL Use and Credit Health

Using BNPL responsibly can help maintain or improve credit health as reporting practices evolve. Making all payments on time is most important. Payment history is a significant credit score component, so timely payments on reported BNPL accounts build a positive record, while missed payments lead to negative impacts if reported or sent to collections.

Consumers should understand which BNPL providers report to credit bureaus, as practices vary. Some major providers report comprehensive data, while others only report delinquency. Monitoring credit reports from Experian, Equifax, and TransUnion is important to see if BNPL activity is reported and to ensure accuracy.

Avoiding over-reliance on BNPL services is another strategy. Too many simultaneous BNPL loans may cause financial strain and make managing multiple repayment schedules challenging. Be mindful of open accounts and ensure payments are comfortably affordable without overstretching a budget for financial well-being and credit health.