Buy Now Pay Later Can Hurt Your Credit Score

Companies such as AfterPay, Sezzle, Klarna, and Affirm have been a blessing for consumers who wanted to shop for their favorite brands with just four easy payments. The convenience and affordability gave consumers a way to shop without killing their budgets or affecting their credit scores. This has come with much criticism from the financial experts stating that these companies make it easier for consumers to spend more than what they can afford.

Though this has not slowed down as 45% of shoppers have signed up for at least one buy now, pay later account according to CNBC, and that 22% actually experienced buyers after receiving their items.

Now to add more hesitation to the list these buy now, pay later purchases are now expected to be reported to the three major credit bureaus. The February 2022 TransUnion announcement comes after the Equifax and Experian announcements in late 2021. Though they are still collecting the data on how this will be scored and data and purchasing trends are currently being collected.

Though this may be seen as a positive for those who are still attempting to establish their credit as 98% of consumer installments were paid by the end of 2021, according to CNBC. There is no word on how this would affect those with established credit history.

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