If you recently use Confirmation to purchase now, then purchase later or plan for futures, the activity can now appear in your credit report. BNPL Service announced that it will provide information on the installment loan products that its installment loan products will be sent to the credit bureau Experaian on or after April 1.
Credit reporting agencies obtain records from transactions, debt and payment history of credit card issuers, banks and commercial lenders to determine your credibility. However, unlike other traditional financial institutions lending, BNPL is often left behind credit reports.
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Confirmation is the first major BNPL provider to report these popular short-term loans to the credit reporting system that provide a convenient, interest-free payment method for the credit reporting system. Experian said the move will help lenders make smart decisions about expanding their credit and help you build a credit history.
But is this good news for you? How will it affect your financial development? This is something to know.
Read more: What are the 3 student bureaus? Equifax, Experian and Transunion explain
What does BNPL mean for your credit report
“The new loan report will not include consumers' traditional credit scores in the short term, but as the new credit score model develops, it may include consumers' traditional credit scores,” confirms.
Your credit history is one of the factors that affect your credit score, so payment on time and in full can be beneficial to you. Conversely, any missed or expired debt repayments can lower your score.
In the Help Center article, confirm that the following factors will not affect your credit score:
- Open an account
- Check your purchasing power
- “Pay Now” transaction
According to confirmation, the following loan activities may affect your score:
- “Pay over time” plan
- Payment history
- Delayed payment
- Credit Utilization Rate
- How long have you been
Prevent BNPL plans from harming your financial situation
Confirmation is currently the only BNPL company to report to three credit bureaus. However, other BNPL lenders and other major institutions outside Experian (Equifax and Transunion) may not be behind.
Like any form of credit or loan, you should be computed and strategic about using BNPL. The potential impact on your credit score is only a consideration.
Even if the BNPL plan does not charge interest, it is usually a bad idea to pay in installments. It can induce you to buy something you can’t afford, resulting in delayed payments and lock you into repayment cycles that can limit your budget.
If you can’t pay for the purchase in full, consider postponing your purchase, finding other affordable ways (such as buying a used car) or putting the fee on a 0% interest credit card and planning to pay off the balance before interest gains.
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