Does Buy Now Pay Later (BNPL) affect your credit score?

What is Buy Now Pay Later?

Buy Now Pay Later is a way of purchasing items on credit and paying for them later, often in instalments.

Used sensibly, BNPL can help with cash flow and budgeting and be cheaper than other forms of credit such as credit cards.

BNPL is nothing new. Various brands, such as Very, Jacamo, and Next have been offering buy now pay later-style credit for some time — allowing customers to spread the cost of purchases before the term became widely used.

The best known BNPL companies in the UK are Klarna, Clearpay, and PayPal. Different retailers work with different BNPL lenders — there might be one, or several options available at an online checkout.

How does BNPL work?

BNPL usually offers the option to pay for a purchase in interest-free instalments over a set period of time, with the first instalment due at the point of purchase. Alternatively, you can simply pay for something at a later date.

For example, you might pay in weekly, fortnightly, or monthly instalments — or in full, 14 or 30 days after the purchase.

Although BNPL credit is often interest-free, you are still borrowing money and entering into a credit agreement. Not paying the money back can affect your credit score.

Do I need a credit check to use BNPL?

You usually need to pass a credit check to use a BNPL service. The credit check will also be used to confirm your identity.

Most BNPL lenders use soft credit checks. These are only visible to you, not lenders or anyone else looking at your credit report.

Some BNPL lenders might carry out a hard credit check if you apply for a longer-term or interest-bearing loan. They should tell you before they do this. A hard credit check will leave a mark on your credit file that can be seen by other lenders. Too many hard credit checks can cause your credit score to temporarily decrease.

Does Buy Now Pay Later affect your credit score?

Yes — but it depends on the provider. Since mid-2022, most major BNPL lenders have started sharing payment information with the three UK credit reference agencies (CRAs) — Experian, Equifax, and TransUnion. However, not all providers report to all three agencies, so the impact on your credit score can vary.

As a general rule:

• If a provider reports to CRAs, on-time payments could help build your credit history, while missed payments or defaults will damage your score
• If a provider doesn't report to CRAs, your payment history won't show on your credit report — but if you miss payments and the debt is passed to a debt collection agency, that can still appear on your file and negatively affect your score
• Some providers only carry out a soft credit check when you apply, which won't affect your score — but others may carry out a hard check for longer-term or interest-bearing products, which will leave a mark on your file

The best way to find out whether a specific provider reports to CRAs is to check their website or terms and conditions before signing up. This is especially worth doing if you're planning to apply for a mortgage or other credit in the near future. Now that FCA regulation is in place, reporting practices are likely to become more consistent across the industry over time.

Can BNPL affect a mortgage application?

Yes — and this is worth being aware of even if your BNPL use doesn't show on your credit report.

Most mortgage lenders review three months of bank statements as part of their affordability assessment. Even if a BNPL provider doesn't report to credit reference agencies, lenders can still see BNPL repayments coming out of your account — and may factor them into their affordability calculations.

Some lenders go further. Research by Which? found that four of the UK's ten biggest mortgage lenders — Barclays, Halifax, Nationwide, and TSB — specifically ask applicants to declare any BNPL arrangements alongside other credit commitments such as loans and credit cards.

If you're planning to apply for a mortgage in the near future, it's worth:

• Avoiding new BNPL agreements in the months leading up to your application
• Clearing any outstanding BNPL balances where possible before applying
• Making sure all BNPL repayments are up to date, as missed payments can be flagged by debt collection agencies

BNPL use alone is unlikely to be reason enough for a lender to reject your application — but if it suggests you're regularly relying on short-term credit, it could affect how much you're able to borrow.

Is BNPL regulated in the UK?

BNPL has grown rapidly in the UK — from £60 million in 2017 to more than £13 billion in 2024 — but for a long time it wasn’t regulated in the way other forms of credit were.

That has now changed. The FCA has brought BNPL into its regulated consumer credit regime, introducing:

• Mandatory affordability checks — providers are legally required to assess whether repayments are affordable before offering credit, in the same way other lenders must
• FCA authorisation required — all BNPL providers must be authorised by the FCA to operate
• Stronger consumer protections — BNPL users now have access to the same complaint and redress rights as other regulated credit users, including access to the Financial Ombudsman Service

What this means for your credit score: as providers operate under the same rules as other lenders, reporting practices are likely to become more consistent across the industry. If you're using BNPL regularly, it's worth being aware that your payment history may become more visible to lenders in the future.

How to use BNPL responsibly

BNPL can be a useful financial tool if you use it carefully. To avoid any negative impact on your credit score:

• Only use BNPL for purchases you know you can afford to repay
• Keep track of how many BNPL agreements you have running at the same time
• Set reminders or Direct Debits for repayment dates
• Check which providers report to CRAs before using them, so you understand the potential impact
• If you're struggling to keep up with repayments, contact the provider as soon as possible

If you're struggling with debt, you can access free financial advice and support from organisations including Money Wellness, StepChange, Citizens Advice, National Debtline, and MoneyHelper.