Buy now, pay later (BNPL) is a convenient way to checkout at a physical or online store, using a BNPL option.

The option to buy your purchase now and pay for it in installments overtime with buy now, pay later, can be very tempting. You may think, why put down $80 on the spot for a new TV screen, when you can pay $20 monthly for the next 4 months instead?

Here’s the catch. When you opt to buy now, pay later, it’s considered a finance loan. That’s because the company is lending the purchase to you while you make payments in installments over a given time period.

Finance loans may appear on your credit report. That being so, they could affect your credit. 

How does buy now pay later affect your credit

Lenders see buy now, pay later as a high risk. When a lender sees that you opted to split an $80 purchase into four installments, that’s a big red flag. 

You can’t afford to pay the full price tag on a small purchase? Well then, a lender would be uncomfortable approving you for a big loan or credit line. The risk is just too great as it seems you live on a very tight & over leveraged budget. 

Not all finance loans get reported

The good news is that not all finance loans, or buy now pay later loans, get reported.

So for those that want to take advantage of BNPL, you just have to make sure to use the ones that don’t get reported to your credit report. You’ll thus avoid your credit being affected. 

These are the BNPL that our readers reported to us that they did not report to their credit report:

PayPal does not report.

Affirm does not report short term finance loans of a few months but they will report long term finance loans.

Do you have data points of any other BNPL company? Please share it in the comments below and I will add it to the post.