Are you one of the 1 in 5 shoppers who uses Klarna or other Buy Now, Pay Later? If you are, are you one of the 40% of customers who don’t know it can affect their credit rating? By Emma Irving.
Who needs old-fashioned money when you’ve got Klarna? The Swedish firm that lets you try before you buy has taken the retail world by storm, and is a particular hit with Millennials and Gen Z who might be a bit strapped for cash.
But we’ve seen some worrying reports that it could also be a debt trap…
Basically schemes like Klarna can damage your credit score if you miss a payment and fail to repay what you borrowed – they can be noted on your credit report and stay there for up to 6 years. So when it comes trying to secure a mortgage or a loan, you might find it’s a challenge to be approved for credit.
In fact, more than two million shoppers have damaged their credit scores by using ‘buy now, pay later’ schemes, according to new research.
One third of 24 to 35-year-olds used one of the schemes in 2019 and a massive four in 10 reported that their score had been hit as a result.
That’s seriously worrying given that two fifths of shoppers admitted they spend more when using BNPL schemes, and over half felt using it had contributed to their debt levels – meaning that they’re more likely to fall into trouble when it comes to making repayments on time.
Wanna know more?
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