Buy Now, Pay Later: Which Companies Report to Credit Bureaus?

Buy Now, Pay Later apps have become popular for shoppers who want to break up the cost of purchases into smaller payments. These apps can provide purchasing power to those who can’t access traditional credit or store financing due to their credit score or credit history. 

But can using an app like Klarna, Affirm, or Sezzle help you improve your credit? It can. . . if you know which Buy Now, Pay Later companies report to credit bureaus. 

How Buy Now, Pay Later works 

Buy Now, Pay Later (BNPL) apps offer consumers a flexible way to make purchases without paying the full amount upfront. These apps allow shoppers to split the cost of a purchase into smaller, manageable installments without the need for a traditional credit check. 

This convenience makes BNPL apps an attractive alternative for those looking to budget their spending or avoid interest fees associated with credit cards. It's essential, however, to make on-time payments to avoid late fees or potential negative impacts on your credit score. 

Pros of Buy Now, Pay Later 

What makes BNPL so attractive? 

• Flexible payments. BNPL apps allow you to split purchases into smaller, interest-free installments, which could make it easier to manage your budget. 
• No credit check. Many BNPL services don’t require a traditional credit check, making them an option if you have a poor credit score. 
• Instant approval. The approval process is usually quick and straightforward, allowing you to complete your purchase without delay. 
• Interest-free options. Many BNPL plans offer interest-free terms for on-time payments. 
• Increased purchasing power. BNPL services can make higher-priced items more affordable by breaking the cost into manageable payments. 

Cons of Buy Now, Pay Later 

Naturally, there are some drawbacks of BNPL apps: 

• Potential for overspending. The convenience of deferring payments can tempt impulse buying and spending beyond your means. 
• Late fees and penalties. Missing a payment can result in late fees and penalties, which cancel out the interest-free benefits of using BNPL. 
• Limited positive impact on credit score. While some BNPL apps don’t require a credit check, they also may not report to credit bureaus, so your on-time payments won’t help your credit score. 
• Complicated terms and conditions. Some BNPL agreements come with complex terms, including hidden fees or tricky conditions. 
• Impact on credit score. Late payments can negatively impact your credit score if the BNPL company reports to credit bureaus. But even BNPL loans paid on time could reduce the average age of your credit history, which can ding your score. 

Knowing what’s good and bad about BNPL means being able to make an informed decision before selecting the option at checkout. 

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Do Buy Now, Pay Later companies report to credit bureaus? 

Only some Buy Now, Pay Later companies report to credit bureaus. If using a BNPL app to improve your credit is the goal, be sure to choose a company that shares payment information with credit bureaus. 

We looked at eight popular BNPL apps to identify which ones report to credit bureaus, plus other features to know about. 

Affirm 

Affirm has no fees, including late fees. It uses simple interest (up to 36%) rather than compound for transactions that charge interest. It’s one of the most popular BNPL apps on the market today. 

• Reports to credit bureaus: Yes (Experian) 
• Credit check required: Yes, a soft credit check for most transactions 
• Purchase limit: $17,500 
• Number of installments: Varies, but typically offers three, six, or 12 months 
• Late fees: None 

Splitit 

Splitit takes a different approach by using the available limit on credit cards you’re already approved for and spreading purchases among them. It’s one of the most popular no-credit-check BNPL apps. 

• Reports to credit bureaus: No, but your credit card provider does 
• Credit check required: No 
• Purchase limit: Based on your available credit 
• Number of installments: Three to 24 
• Late fees: None 

Sezzle 

Sezzle allows customers to reschedule payments for up to two weeks of additional time. Purchases require 25% down. It’s great if you’re looking for a BNPL app that offers flexible payment schedules. 

• Reports to credit bureaus: Yes, if you join Sezzle Up 
• Credit check required: Yes, a soft credit check when you select a payment plan 
• Purchase limit: $2,500 
• Number of installments: Four 
• Late fees: None 

Perpay 

Perpay uses your verified income to set spending limits with no credit history check. Use is limited to Perpay’s marketplace, and purchased items aren’t shipped until the first payment is made. Since it doesn’t require a credit check, Perpay can be a good BNPL option for someone with bad credit. 

• Reports to credit bureaus: Yes, after activating credit building 
• Credit check required: No 
• Purchase limit: Based on your verified income amount 
• Number of installments: Variable, set by user according to their paycheck schedule 
• Late fees: None 

Klarna 

Klarna offers users the option to finance large purchases for up to 24 months, while smaller purchases can be paid over four interest-free payments. 

• Reports to credit bureaus: No 
• Credit check required: Yes, soft credit check for each purchase 
• Purchase limit: No predefined limit 
• Number of installments: Four, interest-free. Up to 24 months, with up to 28.99% interest 
• Late fees: Yes, up to $7 per automatic payment 

PayPal Pay in 4 

The PayPal name is accepted by millions of online merchants. Their Pay in 4 app allows users to use their PayPal accounts to make interest-free purchases between $30 and $1,500. 

• Reports to credit bureaus: No 
• Credit check required: Yes, a soft credit check for each purchase 
• Purchase limit: $1,500 
• Number of installments: Four 
• Late fees: None 

Afterpay 

Afterpay uses smart limits and reminders to keep users from overspending or missing payments. It requires 25% down for purchases. 

• Reports to credit bureaus: No 
• Credit check required: Yes, a soft credit check at sign-up 
• Purchase limit: Initial $600; increases with consistent on-time payments 
• Number of installments: Four 
• Late fees: Can be 25% of your order 

Acima 

Acima acts as a lease-to-own program by purchasing an item from a retailer, with the customer making lease payments on the item. The customer can purchase it at the end of the lease or cancel the lease at any time, returning the item in good condition. 

• Reports to credit bureaus: Yes (Experian) 
• Credit check required: Yes, but Acima considers many factors besides a credit report 
• Purchase limit: $4,000 
• Number of installments: Offers 12, 18, or 24-month leases paid monthly 
• Late fees: Yes, fees are outlined in the lease agreement 

BNPL vs. layaway 

BNPL apps and layaway both help consumers afford purchases without paying the full price upfront, but they work in different ways. It’s important to understand the distinctions between them when deciding which is best for you. 

Key differences between BNPL and layaway: 

1. Payment timing. With BNPL apps, you receive the item immediately and pay it off in installments over time. Layaway requires you to make all payments before taking the item home. 
2. Credit and fees. BNPLs often don't require a traditional credit check and may offer interest-free periods for on-time payments. Layaway typically doesn't have interest, but there may be a service fee or cancellation fee if you don’t complete the purchase. 
3. Ownership. With BNPL, you own the item upon purchase, which means you can use it immediately. An item you purchase with layaway can’t be used until you receive it when you make the final payment. 
4. Flexibility. BNPL offers more flexible payment plans tailored to your financial situation, whereas layaway usually has fixed payment schedules over a set period. 
5. Risk. The risk with BNPL is that missed payments can lead to late fees, potential damage to your credit score, and interest charges. With layaway, you risk losing the money you've already paid if you can't complete the payments, although some retailers offer refunds or store credit. 

Tips to boost your credit score 

A good credit score is helpful whether you use BNPL apps or not — but improving your credit score could allow you to use BNPL apps with better terms, making them even more cost-effective than credit cards. 

Here are some simple tips for boosting your credit score: 

• Pay all your bills on time 
• Pay down debt 
• Don’t close old accounts (but don’t use them, either!) 
• Limit new credit applications 
• Diversify your credit mix 
• Regularly check your credit report 

While improving your credit is a gradual process, you can start taking steps today that will pay off in a better credit score. 

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Buy Now, Pay Later FAQs 

Does BNPL help your credit score? 

If you use a BNPL app that reports to credit bureaus, such as Affirm, Sezzle, or Perpay, your on-time payments could help improve your credit score. 

Is BNPL better than using a credit card? 

It depends on whether you want to save money or build your credit. Using an interest-free BNPL app and making all payments on time will save you money you would have paid in credit card interest. 

However, if you make on-time credit card payments consistently, the information is shared with credit bureaus and helps your credit score, whereas many BNPL apps don’t report on-time payments to credit bureaus. Worse, using apps frequently can potentially hurt your credit score if reported BNPL payoffs lower your average length of credit history. 

Is it safe to Buy Now, Pay Later? 

You should give BNPL the same careful consideration you would any type of loan or credit card. Only make purchases you’re confident you can repay, and don’t overuse BNPL apps. 

Used wisely, BNPL can allow a consumer to make a much-needed large purchase without paying accrued interest charges or depleting your savings. 

What are some alternatives to Buy Now, Pay Later? 

If BNPL isn’t right for you, but you still need money, consider alternatives like a Payday Loan, Cash Advance, or Installment Loan to cover purchases.