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Equifax is adding buy now, pay later payments to credit reports


Credit reports will soon be updated with payments on loans that are buy now and pay later (BNPL). This is good news for certain consumers but it should not be a surprise to others.

Customers can borrow the money to finance purchases. four equal installments rather than all at onceHave exploded in popularityThese numbers have grown over the last few years and will continue to grow. Equifax is one of three major credit bureaus in the United States. announced earlier this monthThese installment plans will be recorded on the reports as soon as possible in 2022.

Some are currently available BNPL companies do report some loan informationto some credit bureaus. For example, Affirm reports some loans to Experian. Equifax, however, will be adding BNPL information to the database for the first-time.

This will allow lenders to see “a more complete picture of people’s financial commitments,” such as the amount they owe on their plans. The bureau also points out that credit reporting could be enhanced by including on-time BNPL loans payments. potentially increaseConsumer credit scores

By the same token, if a consumer fails to make these payments, it could lead to a lower credit score. This is similar to missing a payment on a credit card.

BNPL loans are also known as point-of sale loans. They are easy to get and don’t usually require a credit check. That makes them especially popular among younger consumersPeople who don’t know how to credit the industry or have no credit history.

Equifax states that this is one of the reasons Equifax recommends including on-time payment information in credit reports to help young consumers who are more likely to have access BNPL loans over other credit types, and build their credit history.

However, credit agencies as well as BNPL companies like Afterpay or Affirm need to address a few points. These types of loans are typically short — repaid within a few weeks — and consumers can open and close multiple BNPL loans at the same time. It is possible that this could cause problems, as credit scores are calculated based on the average age of your accounts and how long ago it has been since you opened new accounts.

There is often a delay between opening an account and the time it appears on their credit reports. This means that consumers may need to repay it before they see it.

BNPL payments may be added to credit reports to boost credit scores, provided they are paid back on time.

You must be able to repay any BNPL loans you take out.

According to the BNPL website, “Just because your credit is approved for BNPL (or any other credit product) doesn’t necessarily mean that you have to use it.” Consumer Financial Protection Bureau.

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