'Buy now, pay later' plans could soon impact credit scores

In recent years, buy-now pay-later options have made it easier to purchase things that you might want or need right now

even if you don't have the cash on hand without facing the penalties and interest rates on credit cards

But it's now April, a new month, new rules. As of April 1st, a firm

One of the nation's biggest buy-now pay-later lenders is reporting all of its short-term interest-free installment loans to the Credit Bureau Experian

That means these loans will now show up on your credit. credit report, much like mortgages and car loans do. Before now, a firm only reported its long-term

interest-bearing loans. Experian says adding these short-term accounts to reports won't immediately

have an impact on credit scores. Since traditional scoring models have not yet been updated to include

this type of debt, but they soon might. A recent joint study from FICO found 85% of by now-pay-later

users saw score changes of fewer than 10 points by adding the accounts to the credit report

under a simulated model. According to BankRates' 2024 Buy Now Pay Later survey, nearly two and five

people use these services, and it's particularly popular among young people. So far, Experian

is the only credit reporting company to add this type of loan to credit ratings, but others

could soon follow suit. TransUnion, for example, is already collecting data from two Buy Now

pay later providers, though it has not specified which two or when that started. To stay up to date

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