BNPL inclusion in credit reports causes growing consumer concerns, survey claims

Consumers are growing increasingly concerned about buy now, pay later programs being reported to credit bureaus.  (iStock)

About 30% of consumers are beginning to grow concerned about their buy now, pay later (BNPL) plans being reported to credit bureaus, according to a new survey from GoCardless. 

Equifax recently announced that it will begin including BNPL information in consumer credit reports in an attempt to make these products safer for consumers and ensure they are not being overloaded with debt. 

"Equifax will be the first credit reporting agency to formalize a standard process for reporting BNPL tradelines for inclusion on traditional consumer credit reports," Mark Luber, Equifax chief product officer for U.S. Information Solutions (USIS), said at the time. "We are committed to helping people live their financial best, and recognize the role that BNPL services can play in helping people build stronger financial profiles."

Consumers are growing concerned as about 24% say they owe a lot of money in BNPL loans, and they fear they won’t be able to pay them off. Younger generations, especially, were more likely to say this including 28% of Gen Z consumers and 27% of Millennials.

If you have wracked up debt through BNPL programs, a personal loan can help you consolidate payments and pay it back down while avoiding late fees. Visit Credible to find your personalized interest rate without affecting your credit score.

APPLE’S CONSUMER DATA PROVIDES 'COMPETITIVE EDGE' FOR BNPL, EXPERT SAYS

Consumers interested in tech to manage buy now, pay later

Many Americans, about 46% according to the survey, say they find it difficult to keep track of their BNPL plans. And 58% say they would need to check their accounts to determine how much they owe. Consumers say they would be interested in an app or website, with 80% saying they would be interested in using it to view their plans and 82% saying they would use the technology to pay them off.

"The Buy Now, Pay Later craze skyrocketed during the pandemic, but the rise in popularity came with more interest from credit bureaus like Equifax to get visibility into consumers' plans," said Vanni Parmeggiani, GoCardless director of open banking and real-time payments. "It's understandable why consumers are concerned about how these loans can impact their scores, especially with a number of them worried they can't pay off their plans. 

"For those who can, switching from credit cards to ACH payments for your BNPL loans can be a more foolproof payment method," Parmeggiani said. "ACH relies on bank account information, which is less likely to change and is more secure than credit cards. This reduces the likelihood of a failed payment, fraud and the chances that a BNPL plan will harm your credit rating."

If you are interested in using a personal loan to pay down BNPL debt, consider using an online marketplace to ensure you get the best interest rate. Visit Credible to compare multiple lenders at once and get prequalified in minutes.

WHAT YOU NEED TO KNOW ABOUT EXPERIAN'S 'SPECIALTY' BNPL CREDIT BUREAU

Regulatory concerns grow over BNPL

The BNPL industry continues to grow, and even Apple recently announced its new BNPL product, raising new concerns over the lack of regulation in the sector, an expert said. Apple’s venture into BNPL highlights "the growing opportunities offered by fintech," GlobalData Associate Analyst Beyza Karakoy said.

If you have taken on too much debt through BNPL, consider paying them down through a personal loan. Contact Credible to speak to a home loan expert and get all of your questions answered.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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