Buy-now, pay-later, or BNPL, loans are a type of short-term financing that allows you to split a purchase into equal, often interest-free, installments paid over a few weeks or months.
Applying for a BNPL loan usually involves a soft credit check, meaning it won’t hurt your credit scores. But once the loan is approved and active, it may affect your credit. Read on to learn how these loans could affect your credit history and scores.
Does buy-now, pay-later affect your credit scores?
BNPL loans may soon affect your credit scores. Existing versions of the most widely used credit scoring models — FICO and VantageScore — aren’t using BNPL data in their score calculations yet, but the FICO® Score 10 BNPL and FICO® Score 10 T BNPL, launching in fall 2025, will factor in this information.
Is buy-now, pay-later bad for your credit?
A buy-now, pay-later loan can hurt your credit if the BNPL provider reports your loan and activity to one of the three major credit bureaus — Equifax, TransUnion and Experian — and you make a late payment or miss one altogether. That negative history can appear on your credit report. Additionally, if you don’t repay your BNPL loan and it’s turned over to a debt collector, that collection could be reported to a credit bureau and hurt your credit scores.
Some companies, such as Affirm, report BNPL activity to at least one credit bureau, while others, such as Klarna and Afterpay, don’t.
If your BNPL provider does report to a credit bureau, here’s how the information is used:
- TransUnion notes on its website that any BNPL information provided to the credit bureau is visible to you but can’t be used by credit scoring companies or lenders and won’t affect credit decisions or your scores. It states, however, that this information may factor into your credit score provided by TransUnion in the future.
Beginning in January 2026, all Credit Karma members with any BNPL account reported to TransUnion will see that account reflected on their TransUnion credit reports as “point-of-sale installment loan.” That information doesn’t currently affect members’ credit scores.
- Equifax credit reports include any BNPL information reported by providers. This information doesn’t affect your credit scores, but can be seen by lenders who request an Equifax credit report containing BNPL account information when deciding whether to approve you for a loan or credit.
- Experian also includes any reported BNPL data in your credit report. This information isn’t currently factored into existing credit scores, but is visible to lenders who request an Experian credit report and could affect whether they approve you for a loan or credit.
How does buy-now, pay-later work?
BNPL is a type of short-term financing that allows you to make a purchase and pay for it later in installments. It’s a common option offered by online retailers, but you can also find it at some brick-and-mortar stores.
The standard BNPL plan operates as four equal payments over six weeks. You typically make the first payment at checkout, followed by a payment every two weeks.
Short-term BNPL loans often charge no interest because the provider earns money by charging merchants a transaction fee. But if you opt for longer-term options (ranging from three to 48 months) for bigger purchases, those typically charge interest — at an annual percentage rate, or APR, that’s typically higher than the average credit card APR.
What are the pros and cons of buy-now, pay-later loans?
If you need to make a purchase that just can’t wait, consider the advantages and drawbacks of a buy-now, pay-later loan.
Benefits of buy-now, pay-later loans
- Convenience. You’ll find out at checkout if you’re approved for a BNPL loan to make a purchase — no need to wait for a lending decision.
- Interest-free periods. With many short-term BNPL loans, like those offered by Klarna and Affirm, you won’t pay interest on your purchase.
- Soft credit check. The hard credit checks that some lenders do when you apply for a loan can ding your credit scores. But buy-now, pay-later providers typically use a soft credit check that won’t affect your credit scores.
Drawbacks of buy-now, pay-later loans
- Short repayment timeline. If you want to avoid paying interest, you typically need to pay for the entire purchase within six weeks, which might be tough for large purchases.
- High interest rates for longer-term financing. Some providers, like Affirm and Klarna offer longer repayment terms — but it’ll cost you. These payment options charge interest, and rates for longer-term financing can be higher than the average APR for credit cards or personal loans.
- Fees. If you make a late payment or it gets returned, you could be charged a hefty fee.
- Might hurt your credit. Some providers report late or missed payments to the credit bureaus, which may appear in your credit report.
Next steps
With BNPL accounts increasingly showing up on credit reports, it’ll be easier to track how your BNPL loan fits into your overall credit profile.
If you have one or more BNPL loans, you can check your TransUnion report for free on Credit Karma to see if the account(s) appears as a “point-of-sale installment loan.”
If you’re thinking about getting your first BNPL loan (or another one), consider comparing the loan terms and potential credit impact to that of a credit card or small personal loan. This can help you choose the best option for your financial situation and credit-building goals.