Buy now, pay later plans could help build your credit history, but missing a payment could hurt your credit score later on.
Viva Tung/CNET
In a major financial shift, Buy Now, Pay Later (BNPL) giant Affirm has announced it will report all customer transaction and payment history to major credit bureaus TransUnion and Experian this spring to help lenders assess borrower risk. The fintech firm confirmed that payment activities for installment loans issued on or after 1 May will be shared with TransUnion, following a similar reporting partnership with Experian that began for loans issued on or after 1 April.
Credit reference agencies regularly compile data on transactions, outstanding debts, and repayment histories from traditional lenders, credit card companies, and banks to establish creditworthiness. Historically, short-term BNPL financing has remained outside of this traditional credit reporting ecosystem, leaving a significant portion of consumer borrowing invisible to credit bureaus.
By sharing this data, Affirm becomes the first major player in the BNPL sector to systematically report these popular short-term, interest-free installment loans to the credit-reporting network. According to the company, this integration will allow mainstream lenders to make more accurate credit decisions while offering consumers an opportunity to build their credit profiles through responsible borrowing.
How BNPL data integrates with credit files
According to an official statement from Affirm, customers will begin seeing their transaction history reflected on their TransUnion credit files. However, these specific records will not immediately impact traditional credit scores or be visible to other lenders in the short term. Over time, as credit scoring agencies update and develop newer evaluation models, this data is expected to influence credit ratings directly.
Because repayment history is a primary driver of credit health, making consistent, on-time payments can boost a credit profile, whereas missed or late payments will likely damage it. To clarify the boundaries of this new policy, Affirm published a Help Centre guide outlining which activities will remain neutral and which could affect a credit score.
Activities that will not affect credit scores:
- Creating an Affirm account
- Checking eligibility or purchasing power
- Utilising “Pay Now” options at checkout
Activities that could affect credit scores:
- Using “Pay Over Time” monthly installment plans
- Your overall payment history
- Late or missed repayments
- Credit utilisation ratios
- The average age of your credit accounts
Protecting your financial health from BNPL risks
While Affirm is currently the sole major BNPL provider reporting comprehensive data to the top credit bureaus, competitors and other major agencies like Equifax are expected to adopt similar reporting practices in the near future. Consequently, consumers must approach BNPL services with the same caution and planning as any traditional credit card or loan product.
Financing everyday purchases through installments carries inherent risks, even when structured as interest-free agreements. These plans can encourage impulse buying, tempt individuals to purchase items beyond their financial means, and lock borrowers into restrictive repayment schedules that strain monthly budgets.
If purchasing an item outright is not financially feasible, safer alternatives include delaying the purchase to save up, exploring more affordable secondhand options, or utilising a credit card with a 0% introductory interest rate—provided there is a clear strategy to clear the balance before interest charges apply.