Buy Now and Pay Later (BNPL) is offered at many online checkouts as an alternative payment method to credit cards and loans and is meant to be an easier solution allowing you to, as the name suggests, to buy something now and pay later.  Usually payment is made in full 30 days after purchase or there are three small and manageable payments over a fixed period of time, normally interest free too!

We first blogged about BNPL last year when it was first proposed that these BNPL agreements will be shown on your credit reports. They are now officially appearing on your Credit Report so we thought updating you with some updated FAQ’s would be best and help keep you in the loop!

We have listed some of the top FAQ’s here for you;

Why is buy now, pay later information being added to credit reports? 

Credit Reference Agencies (CRAs) are including buy now, pay later data in credit reports to support consumers in managing their finances and to ensure payment behaviour on buy now, pay later agreements is visible. 

When will this information appear on my credit report? 

The three major CRAs in the UK each have their own timelines, but TransUnion (who provide the reports to ScoresMatter consumers) started to incorporate buy now, pay later data into traditional credit reports starting in summer 2022. 

How will this affect my credit score? 

There will be no immediate effect on TransUnion credit scores. However, as the data becomes more widely used, TransUnion will be updating its credit scoring as appropriate

Why are things changing? 

People need as much choice as possible when it comes to finding finance that’s right for their needs, and on terms they can afford. Including buy now, pay later data in credit reports will support consumers and help lenders make informed credit decisions.

Will buy now, pay later purchases made in the past be visible on credit reports? 

Providers will let customers know their data is being shared with TransUnion before it appears on their credit report and can confirm the dates it will apply from. 

Will I need to provide more information when using buy now, pay later finance? 

This will depend on the buy now, pay later provider, and they can let you know.

Will a credit search be carried out every time a buy now, pay later purchase is made? 

This will depend on the provider and whether another search has recently been carried out. The product you’re applying for will also determine the search type. 

Will buy now, pay later information be available on other credit reports and scores? 

Different credit reference agencies may have different approaches and timescales in terms of how they plan to incorporate buy now, pay later data. It will be up to individual finance providers to decide how they use buy now, pay later information in lending decisions.

When will providers start sharing these details with TransUnion?

 Providers can share this information with TransUnion as soon as they are ready. Many well known buy now, pay later companies are already working with TransUnion and have been providing the data since the summer of 2022. 

Will a good payment history with buy now, pay later be recognised in credit scores? 

Payment behaviour will be visible to lenders, so it could be taken into account in lending decisions but won’t have an immediate effect on credit scores.

 If I miss a buy now, pay later payment, will it affect my credit score? 

Credit scores won’t be impacted initially but missing payments would be visible to lenders and could affect your ability to borrow, so it’s really important to keep up repayments as agreed. 

Will hard credit checks now be recorded when I am taking out buy now, pay later finance?

 Buy now, pay later finance checks will be recorded on your TransUnion credit report, and will be visible to other lenders. However, these checks will be shown to lenders in a different way to traditional hard searches, typically used for things like mortgages, credit cards and loans, or soft searches, often used for quotations and eligibility checks before credit is provided. It will be up to individual finance providers to decide how they use these new checks in lending decisions. 

Do buy now, pay later providers have to report this information? 

Not at present, although the Financial Conduct Authority (FCA) will be introducing new rules for buy now, pay later providers in the near future. However, providers have been encouraged to start sharing this information as soon as possible to support financial inclusion and wider access to credit

Currently, here at ScoresMatter we offer a Loan Affordability calculator that will help you to determine if you can afford additional monthly payments and our customers can check this before taking out any additional credit agreements. ScoresMatter also provides its customers with access to their reports from TransUnion, so our customers will be some of the first to see BNPL information on their credit report too!

Information provided in this blog is for informational purposes only and does not constitute financial advice. Taking out any kind of credit will impact your Credit Score.