Do You Have to Have Credit to Use Klarna?

Klarna is a “Buy Now, Pay Later” (BNPL) service that allows consumers to spread the cost of purchases over time. It offers various payment options, enabling shoppers to acquire items immediately and pay in installments. Klarna divides the total purchase amount into smaller, manageable payments.

Klarna’s Approach to Credit Assessment

Klarna performs assessments to determine a user’s ability to repay, with checks varying by payment option. For services like “Pay in 4” or “Pay in 30 days,” Klarna conducts a “soft credit check.” This allows Klarna to review credit information without impacting their credit score. These inquiries are not visible to other lenders and do not leave a mark on a credit report.

This assessment helps Klarna confirm identity and evaluate financial behavior without the negative implications of a hard inquiry. These checks ensure responsible lending for shorter-term payment plans, providing a snapshot of a user’s financial standing to determine eligibility.

In contrast, longer-term financing options may involve a “hard credit inquiry.” This is a more thorough review of a credit report, which can temporarily lower a credit score. Hard inquiries are visible to other lenders and are associated with traditional loans.

Klarna’s financing products, which often span several months, are treated similarly to conventional credit lines. For these options, a hard check is performed to assess the risk involved in extending credit for larger purchases.

Eligibility and Approval Factors

Klarna’s approval process considers several factors beyond a traditional credit score, especially for its shorter-term payment options. To use Klarna, individuals generally must be at least 18 years old and a resident of the United States. A valid US-issued debit or credit card, or a bank account, is also required for payment processing. Additionally, users need an SMS-capable phone number to receive security verification codes during the application process.

Approval for Klarna is typically on a per-transaction basis, meaning that being approved for one purchase does not guarantee approval for all future transactions. Klarna assesses each purchase individually, taking into account factors like the specific transaction amount and the merchant involved. This dynamic approval system helps Klarna manage its risk exposure for each individual purchase.

A user’s payment history with Klarna itself also plays a role in future approvals. Consistently making on-time payments for previous Klarna purchases can improve the likelihood of being approved for subsequent transactions. While a perfect credit score is not always necessary, Klarna examines credit reports to understand financial behavior and assess the ability to repay the specific purchase. Klarna’s internal algorithms evaluate a combination of these data points to make an instantaneous decision on eligibility.

Impact on Your Credit Profile

Using Klarna can influence a consumer’s credit profile, particularly through its reporting practices to credit bureaus. Since June 2022, Klarna has been reporting user transactions and repayment information to major credit bureaus, including Experian and TransUnion. This reporting includes both positive payment behavior and instances of missed payments.

For longer-term financing products, Klarna’s reporting of on-time payments can contribute to a positive payment history on a credit report. This can demonstrate responsible credit management to other lenders. However, the short-term “Pay in 4” or “Pay in 30 days” options generally do not build credit in the same way as traditional credit accounts.

Conversely, failing to make payments on time can negatively affect a credit score. Klarna reports late or missed payments to credit reference agencies, and these negative marks can remain on a credit file for up to six years. Repeatedly missing payments or defaulting on a Klarna agreement can lead to more severe consequences, such as the account being sent to collections.

An account in collections will almost certainly appear as a significant negative mark on a credit report and can stay there for up to seven years, making it difficult to obtain future credit. Beyond direct credit score impacts, the presence of multiple BNPL obligations on a credit report can also influence how traditional lenders view a consumer’s overall financial health and ability to take on additional debt.