Buy Now, Pay Later Could Soon Impact Your Credit Score — Here’s How

Buy now, pay later (BNPL) has shaken up the credit game with its low-or-no-interest payment plans for large purchases. In fact, Bankrate’s 2024 Buy Now, Pay Later Survey reported that nearly 2 in 5 Americans (39 percent) have used a BNPL service. It’s especially favored among young people.

Those payments, for better or worse, tend to fly under the credit radar. While on-time or missed payments on a credit card or personal loan can help build — or break — your credit, the same hasn’t been true for BNPL.

But BNPL lender Affirm announced on March 19, 2025, that it will start reporting all pay-over-time transactions to Experian, a credit bureau.

Affirm already reports monthly payments on longer-term loans. But now, the popular Pay in 4 plan — which lets you break up a purchase into four interest-free payments — will also show up on your Experian credit report. That includes the original and outstanding balance, payment history and loan terms.

“Having all loans reflected in a consumer’s financial profile will help protect and empower borrowers,” says Libor Michalek, president at Affirm in a press release.

What is Affirm?

One of the major BNPL lenders on the market, Affirm offers payment plans with interest rates ranging from 0 to 36 percent. It’s easy to qualify for Affirm, making it a popular choice for people with poor credit or tight budgets.

Bankrate data shows that, among the most widely used BNPL services, Affirm ties for second along with Afterpay, with 12 percent of Americans having used at least one of the two. Sixteen percent of Americans have used PayPal Pay in 4/Pay Later and 11 percent have used Klarna.

The Pay in 4 plan is Affirm’s version of BNPL. For purchases of $50 to over $1,000, you can make four payments over time, with two weeks between each payment. You’re not charged interest or fees, and there’s no credit hit to apply.

Until now, Affirm has listed “4 interest-free payment plans” under the list of things that won’t affect your credit score on its website. That’s changing with Experian.

What is Experian?

Experian is one of the three major credit bureaus that collects data including on-time or missed payments, outstanding balances, hard credit inquiries and account statuses. This information makes up your credit report.

Alongside Equifax and TransUnion, Experian shares your data with credit-scoring companies like FICO and VantageScore. That’s how you — and potential lenders — get the three-digit number between 300 and 850 that indicates your creditworthiness.

You’ll be able to see all of your Affirm loan information on your Experian credit report starting April 1, 2025, by creating a free Experian membership.

“Greater transparency in buy now, pay later activity is key to helping consumers build their credit histories and supporting responsible lending,” says Scott Brown, group president, financial services of Experian North America in a press release.

How does buy now, pay later affect your credit score?

Historically, BNPL has had minimal impact on borrowers’ credit scores.

The most common BNPL plans, like Affirm’s Pay in 4, usually only request a soft credit inquiry for approval, which doesn’t affect your score. That’s different from things like credit card, personal loan and auto loan applications, which tend to pull hard credit checks that temporarily ding your score.

And while longer-term loans from Affirm and other BNPL lenders tend to be reported to the credit bureaus, the short-term payment plans often aren’t. The CFPB explains one exception — if you don’t repay a BNPL plan, it might be turned over to a debt collector, which is then reported to the bureaus and hurts your credit score.

Buy now, pay later could help borrowers build credit

For poor-or-no-credit borrowers who opt for BNPL because they don’t qualify for traditional credit, there’s been a missed opportunity to build their credit score. The new reporting of Affirm’s Pay in 4 is a chance to improve your Experian credit report.

For example, if you make four on-time payments with a BNPL plan, that positive payment history shows up on your credit report. While traditional credit-scoring models don’t yet look at this data, future models might. Earlier this year, a FICO study showed that incorporating Affirm’s BNPL data into a credit file could increase some borrowers’ FICO scores.

And good credit makes it easier to get approved for future lines of credit, housing, better loan terms and more.

On the flip side, missed BNPL payments could end up negatively impacting your credit score. It’s important to use BNPL plans as responsibly as you should any other form of credit.

Who uses buy now, pay later?

Bankrate reports that more than half of millennials (55 percent) and Gen Zers (51 percent) have used a BNPL service. That’s compared to 31 percent of Gen Xers and 25 percent of baby boomers.

BNPL is an option for spenders who may not want to fork over a chunk of change all at once but can’t qualify for a credit card or afford high interest charges. The most popular reason given for using BNPL was spreading out cash flow (50 percent), followed by low or no interest rate (37 percent), knowing exactly what’s owed and for how long (33 percent) and ease of obtaining credit (27 percent).

Surprisingly, BNPL usage is fairly consistent across income levels. It seems the service’s widespread accessibility to borrowers of all ages, incomes and credit scores has made it a major player in the payment world.

The bottom line

Buy now, pay later services have been fast-moving when it comes to lending but slow-moving when it comes to credit reporting. Affirm’s announcement to start reporting all pay-over-time activity, including Pay in 4, to Experian is a stepping stone toward BNPL users’ payment history becoming part of their creditworthiness. Just keep in mind that the flip side is also true — irresponsible BNPL use could end up hurting your credit.

You can check out your free credit report from Experian to see new BNPL transactions and check for any errors.