Buy Now Pay Later to be included on credit reports

Buy Now Pay Later is to be included on credit reports.

Buy Now Pay Later (BNPL) has been booming. In the run up to Christmas 2021, 17m people were using this form of credit. One of the key players, Klarna, saw its customer base double to 15m since the start of the pandemic.

It’s a boom partly fuelled by lack of regulation. BNPL providers use a business lending loophole to avoid consumer credit protections. Consequently, BNPL doesn’t on appear on a credit report. Therefore, it’s hard to assess loan applications without a full view of borrowing. That’s important because borrowers are unaware of the risks with this type of borrowing. Some debt charities have warned that BNPL is the next Wonga waiting to happen.

An imperfect workaround has been to use open banking, where an applicant might share the account they’ve used for BNPL. Nevertheless, credit data is the best way to put borrowing into context.

It’s the only way to accurately assess afffordability.

Fortunately, from summer 2022, NestEgg’s decision engine will take into account BNPL agreements. These will be known as deferred payment agreements and will start to appear on credit reports later this year.

How it will work

In order to ensure that the right borrower consents are in place, BNPL agreements will be rolled out during 2022.

Initially BNPL agreements will have no impact on credit score. However, this will develop over time as more is learnt about how BNPL affects overall lending risk.

Payment history will be available. NestEgg clients will be able to see the amount owed and whether agreements are up to date.

Additionally a new search footprint will be used so NestEgg clients can see when applications are being made for BNPL. These will be somewhere between a soft and hard search – a new BN footprint.

Part of an expanding decisioning service

BNPL data will be provided at no extra cost to NestEgg clients. This is one new feature amongst many. Last month we introduced credit score reasons. This week open banking data was extended to cover 12 months. Applicant demographics on their way.

Find out how we can futureproof your lending by booking a demo.


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Adrian Davies

Adrian is a co-founder at NestEgg. He is an alternative finance and credit union expert. Adrian has 25 years’ experience in the money advice and responsible lending sectors, supporting credit unions with innovative ideas so they can grow and meet member needs.

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