Buy now, pay later could soon help or hurt your credit score — here’s why

Buy now, pay later apps allow users to opt into payment plans for large purchases. 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 that it will start reporting all pay-over-time transactions to Experian and TransUnion, two major credit bureaus.

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 and TransUnion credit reports. 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 and TransUnion.

What is a credit bureau?

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

The credit bureaus share 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.

Affirm loan information began appearing on Experian credit reports on April 1, 2025, and can be viewed by creating a free Experian membership. Your Affirm activity will appear on your TransUnion credit report starting May 1, 2025.

“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.

“Millions of consumers use Affirm’s pay-over-time financing and they deserve to get credit for their payment behavior,” says Steve Chaouki, president, U.S. Markets and Consumer Interactive of TransUnion, 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 and TransUnion credit reports.

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 — multiple plans running at the same time could run the risk of damaging your credit and incurring fees.

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 and TransUnion 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 and TransUnion to see new BNPL transactions and check for any errors.