Buy now, pay later borrowing set to show up in credit reports

Credit reference agencies Experian, Equifax and TransUnion have announced that BNPL debt will soon start showing on credit reports. Here’s what you need to know.

Experian and Equifax have announced that they’re following rival TransUnion in opting to start reporting data from consumers’ buy now, pay later (BNPL) debt in their credit reports.

This means that all 3 major credit reference agencies (CRAs) will now include BNPL data in your credit report.

This debt could have a negative impact on your score and future lending or the rates you’re offered if, for example, you miss repayments or borrow more than you can really afford through a BNPL service. But it could also help your score if you borrow and repay on time and responsibly.

Why show BNPL debt now?

In recent years, BNPL schemes have soared in popularity. But there’s also growing concern that many people aren’t clear that they’re taking on debt when they use BNPL, and can get into financial problems.

Unlike other types of borrowing – such as credit cards and loans – BNPL services aren’t regulated and providers don’t need to do a “hard” credit check when you apply for BNPL credit or report that you’ve made – or missed – repayments.

Hard credit checks show up in your credit report and other lenders can see them before deciding whether to lend money to you. If there’s no trace of BNPL debt, it can mean that you end up borrowing more money than you can afford to repay.

What is buy now, pay later and how does it work?

BNPL services allow you to spread out payments over a short period – typically a few weeks or months – without paying interest.

Our full guide to BNPL credit explains more.

When is this happening?

TransUnion is planning its “phased implementation” from summer 2022. Equifax and Experian are yet to announce when the change will take effect but it’s likely to be within the year.

How to prepare for BNPL to show on your credit report

There are a few things you should know if you’re currently using BNPL scheme or are considering doing so.

Depending on how the CRAs implement the change, the introduction of reporting your BNPL data to CRAs could have a negative impact on your credit score and any future lending if you don’t repay on time.

But it may also become possible to boost your credit score if you borrow and repay responsibly and on time through BNPL.

If you’re considering signing up to a BNPL service (or are currently using one), it’s crucial to understand the terms. Some schemes charge late payment fees, for example.