Buy Now Pay Later to appear on credit reports for the first time

TransUnion, one of the UK’s three largest credit reference agencies has announced that Buy Now Pay Later (BNPL) purchases are going to appear on credit reports for the first time, as of this summer.

In our recent blog, Buy Now Regret Later, we explained that the FCA has begun to take a close interest in the BNPL market – worth an estimated £6.4bn a year in the UK alone – and how it can impact young people’s finances and easily facilitate them falling into debt.

Resultantly, TransUnion has announced that it will begin to include BNPL transactions in credit reports from the summer of 2022, and both Experian and Equifax look likely to follow suit shortly after this.

What is BNPL?

To coin a phrase made famous by Ronseal, BNPL does exactly what it says on the Tin: you buy now, and either pay later in one chunk, or later, spread across a couple of installments.

Why is this an issue?

Well, the FCA sees the prolific advertising of these facilities and the fact that they are seen to be credit facilities, but don’t tend to make that strictly clear as something that is encouraging young people to get into debt and therefore, needs regulating.

Why is TransUnion adding BNPL to credit reports?

TransUnion has said that the move is to include BNPL on credit histories is of twofold purpose: to help protect consumers and to enable credit providers, when considering whether to accept someone for credit, to ensure payment plans are both affordable and sustainable.

“We’re delighted to announce these important changes to the way buy now, pay later products are treated within the credit ecosystem,” said Satrajit Saha, CEO of TransUnion in the UK.

“We’ve been working closely with prominent providers of buy now, pay later finance to lead the way in line with industry changes and consumer needs.

“Incorporating this data into credit reports will support consumers that are using this type of point-of-sale finance, whilst also ensuring lenders have a comprehensive picture of a borrower’s financial position.”

TransUnion also hopes that adding BNPL to credit reports will help those with low credit ratings to increase their chances of borrowing in the future by showing the history of successfully repaid BNPL agreements, which, like using a credit card and paying off the balance each month, helps build your credit score.

Shail Deep, chief product officer at TransUnion in the UK, added: “These changes will be really beneficial for those with thin credit files, supporting financial inclusion and wider access to credit, as well as helping to ensure finance providers have a holistic view of an individual’s borrowing, so they can use these insights to help ensure the right outcomes for consumers.”

What can I do if I have BNPL debt?

If you use BNPL schemes responsibly, they can be a good way to effectively spread the cost of high-priced items.

That said, as with any form of debt, if you’re struggling to stay on top of BNPL repayments, it’s important to get help as soon as possible.

Here at Scottish Debt Help we’ve got a great amount of experience when it comes to helping people who are struggling with debts – whether it’s BNPL debt or any other debts.

If your finances feel like they’re already running away from you, a formal debt solution could be a more effective option to deal with your debts. If you’d like to find out more about the debt solutions available to you, give us a call on 0141 816 0394 or complete our enquiry form.