Warning That ‘Buy Now, Pay Later Deals’ Can Affect Your Credit Score

August 27, 2022

In recent years, the many ‘buy now, pay later’ deals which are offered by most of the major retailers have become popular. They allow the customer to spread the cost of paying for goods over a series of instalments, on an interest-free basis. It seems like a sensible and catch-free way to manage your monthly budget. 

However, because such deals, known as BNPL, are officially classed as borrowing, the UK’s major credit referencing agencies are going to start including them in their files, The Sun reports. TransUnion will start doing this from August, while the other two major agencies, Experian and Equifax, will include them by the end of the year. 

While this is not a problem if you meet all the repayments on time, even one missed payment will be flagged up on your credit report for the next six years. Maintaining a good credit score is important, because lenders will use it as part their assessment when deciding whether you are a suitable candidate for a loan or mortgage.  

Therefore, it is advisable to consider whether you will be in a position to meet all the repayments in full before using a BNPL service. This will also curb any impulse to buy things that you don’t really need, or will struggle to afford. 

Another good tip which can improve your credit score is to cut off all financial ties with ex-partners or housemates. This is because any joint accounts you hold will be included in the report, and any damaging financial behaviour by them will affect your own rating, even if it is not your fault.  

If you are looking for IVA mortgage specialists, please get in touch with us today. 

Your home may be repossessed if you do not keep up with your mortgage repayments. 

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