What Is Buy Now, Pay Later (BNPL)?
Buy Now, Pay Later (BNPL) is a financing method that allows consumers to purchase items immediately and pay over time, often in four interest-free installments. This model has seen explosive growth, especially among Gen Z and millennials who appreciate convenience, instant approvals, and the ability to split payments without the traditional hurdles of credit cards.
BNPL is commonly offered at checkout online and in-store, and is now integrated into platforms like:
- Klarna
- Afterpay
- Payflex
- Zip
- Sezzle
- Affirm
Why Is BNPL So Popular?
For many young consumers, BNPL feels more accessible than a credit card:
- No hard credit check (in most cases)
- No need for a lengthy application
- Zero or low interest (if paid on time)
- Appealing user interface and brand tone
According to a recent report by Adobe, BNPL usage in the U.S. increased by over 200% between 2020 and 2023, and it continues to grow globally.
But while it seems like a financial freebie, many users are unaware of how BNPL affects their credit health.
How BNPL Apps Actually Work (Behind the Scenes)
Understanding how BNPL operates under the hood is key to knowing why it can impact your credit.
When you choose BNPL at checkout, you’re essentially entering a micro-loan agreement. The BNPL provider pays the merchant in full on your behalf, and you repay the BNPL company in installments. While most BNPL plans are short-term and interest-free, some platforms offer longer terms with interest (like Affirm’s 3–36 month plans).
Most BNPL providers run a soft credit check to verify your identity and assess basic financial behavior. A soft check does not affect your score. However, in some cases, especially with long-term BNPL loans, a hard check may be conducted, which can temporarily lower your credit score.
Additionally, the repayment data may or may not be reported to the credit bureaus. That inconsistency is where the confusion begins.
Do BNPL Apps Report to Credit Bureaus?
Credit reporting is where things get tricky. Depending on the country and the provider, your repayment activity on BNPL platforms may or may not be reported to credit bureaus.
Here’s a breakdown of the major BNPL platforms:
| BNPL Provider | Reports to Credit Bureaus? | Impact Type | Notes |
|---|---|---|---|
| Klarna (US) | Yes (TransUnion) | Positive & Negative | Late payments can hurt your score |
| Klarna (UK/CA) | In development/testing | Limited | Full rollout expected soon |
| Afterpay | No (currently) | None | May change in the near future |
| Payflex (SA) | Rarely | Minimal | Varies by institution |
| Zip | Depends on region | Mixed | Some longer-term plans report |
| Affirm | Yes | Positive & Negative | Clear reporting policy |
Tip: Always check the Terms & Conditions or Help Center of your BNPL provider to confirm their credit reporting policy for your country.
3 Hidden Ways BNPL Can Still Hurt Your Credit
Even if a provider doesn’t report your installment history to the credit bureaus, BNPL can still impact your creditworthiness in subtle but meaningful ways.
1. Missed Payments → Collections
If you miss a payment and don’t resolve it, the BNPL provider may send your debt to a collections agency. Collections activity does show up on your credit report and can cause your score to drop by 70–150 points, depending on the severity.
BNPL platforms are often lenient with their initial reminders, but many have strict backend protocols. Once the payment is considered severely delinquent, they can offload it to third-party collectors.
2. Thin Credit Profile Perception
Using multiple BNPL platforms without a traditional credit history can make your file look “thin” to lenders. A thin file means you don’t have enough traditional credit data (credit cards, loans, mortgage) for lenders to assess your creditworthiness.
Even if you’ve made all your BNPL payments on time, lenders won’t see those payments (unless they’re reported), so your financial behavior isn’t visible.
3. No Credit History Gets Built
Paying off BNPL purchases on time doesn’t necessarily improve your credit. Why? Because in most cases, it’s not reported. So while it feels like responsible behavior, it does nothing to grow your credit profile.
In contrast, a secured credit card or rent reporting service can actively build your score over time.
Real Story: “BNPL Ruined My Score — And I Didn’t Even Know It”
“I started using Klarna to buy clothes, food, even Uber Eats. It felt safe because I never missed a payment. One month, my card expired, and I didn’t update it in time. I didn’t get the email notice — and boom, I had a late payment reported. My credit score dropped by over 70 points. I only found out when I applied for an apartment.”
— Temi, 27 (UK)
This is a common scenario. BNPL creates the illusion of risk-free spending, but if your linked card fails or you miss a payment, it can cause real damage, sometimes silently.
What to Do If You’ve Been Using BNPL
BNPL isn’t inherently bad, but it requires a smart strategy.
Here are 6 actionable steps to stay safe:
- Use only one BNPL provider at a time to stay organized.
- Set auto-pay reminders using your phone or Google Calendar.
- Keep your debit/credit card info updated to avoid payment failures.
- Track your BNPL activity manually, especially if using multiple platforms.
- Check your credit report quarterly via free tools like Credit Karma, ClearScore, or Borrowell.
- Don’t use BNPL for needs, only for occasional, budgeted wants.
If your goal is to build or rebuild your credit, consider transitioning away from BNPL to solutions that actively report to bureaus.
Alternatives to BNPL for Safe Spending & Credit Building
Secured Credit Cards
Secured cards are credit-building tools where you deposit money as collateral. They report to credit bureaus and are ideal for:
- First-time credit users
- Immigrants with no credit history
- People recovering from bad credit
Recommended options by region:
- US: Discover It Secured, Capital One Platinum Secured
- Canada: KOHO Credit Builder, Home Trust Secured Visa
- UK: Tesco Foundation Credit Card
Rent Reporting Services
These apps report your monthly rent to credit bureaus, helping you build credit without debt.
- BoomPay (US)
- Esusu (US)
- CreditLadder (UK)
- FrontLobby (Canada)
Debit Budgeting Tools
These tools help you manage spending without relying on credit:
- Monzo (UK)
- Chime (US)
- Kuda (Nigeria)
- Revolut (Global)
Budgeting Apps
To avoid needing BNPL in the first place, try:
- YNAB (You Need A Budget)
- Goodbudget
- Notion Budget Tracker Templates
Final Take, Think Before You Tap
BNPL apps are not inherently dangerous, but they are deceptively easy to misuse.
If you’re struggling to build credit, BNPL may feel like a shortcut, but it won’t get you far. Worse, it could quietly derail your financial progress. The smart path? Use BNPL strategically, and supplement it with credit-positive tools.
Remember:
You deserve credit that builds your future, not just finances your weekend.
Want a safer way to build credit? Download our 90-Day Credit Builder Plan or read more about how to build credit from scratch in your 20s
