Buy Now, Pay Later Payments Will Soon Impact Your Experian Credit Score
Buy now, pay later (BNPL) services are evolving in how they affect credit scores, with Affirm announcing it will report all pay-over-time loans to Experian starting April 1, 2025. This change could significantly impact consumers' credit profiles, both positively and negatively.
Woman smiling with phone and card
BNPL services currently have minimal impact on credit scores, as they typically only require soft credit checks. However, Affirm's new reporting policy will include all transactions, including their popular Pay in 4 plan, on Experian credit reports.
Key aspects of this change:
- All Affirm transactions will appear on Experian credit reports
- Payment history, loan terms, and balances will be reported
- On-time payments could help build credit
- Missed payments may negatively impact credit scores
Current BNPL Usage:
- 39% of Americans have used BNPL services
- Most popular among millennials (55%) and Gen Z (51%)
- Used across all income levels
- Primary reasons for use include spreading out payments (50%) and low/no interest rates (37%)
Impact on Credit Building:
- Provides opportunity for those with limited credit history
- Could help improve FICO scores according to recent studies
- Adds payment history to credit reports
- May affect future lending decisions
Woman with phone and credit card
For consumers using BNPL services, it's crucial to:
- Make payments on time
- Monitor credit reports regularly
- Understand how new reporting may affect credit scores
- Use BNPL responsibly, like any other form of credit
This change marks a significant shift in how BNPL services integrate with traditional credit reporting, potentially offering new opportunities for credit building while also introducing risks for those who miss payments.
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