Buy now, pay later will appear on credit files from summer, says TransUnion

A major credit reference agency says people’s buy now, pay later (BNPL) borrowing will start to appear on its consumer credit reports from this summer.

TransUnion said BNPL finance – also known as deferred payment credit – will soon be included within its credit information, to help protect consumers and enable finance providers to ensure that payment plans are affordable and sustainable.

The agency plans a “phased implementation”, with data starting to appear on consumer credit reports from summer 2022.

Satrajit “Satty” Saha, CEO of TransUnion in the UK, said it has been working closely with BNPL providers, adding: “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.”

More than a third (35%) of people used BNPL in 2021, according to TransUnion’s research.

BNPL schemes, which regularly pop up as options at online checkouts, can be a useful way for people to spread the cost of purchases without having to pay interest on their borrowing.

But there are concerns that people have been able to build up large amounts of debt relatively easily and many do not see BNPL as a form of credit.

There has also been evidence to suggest some users have a limited understanding of the consequences of missing payments and are not aware that fees could apply if they fall behind with payments.

Last year, the Treasury launched a consultation into bringing the sector under regulation.

Being able to demonstrate to lenders that they have kept up with BNPL payments could help those without much of a credit history.

Shail Deep, chief product officer at TransUnion in the UK, said: “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.”

A spokesperson for credit reference agency Experian said: “Experian works with several buy now, pay later providers to help them with affordability checks so they can understand their customers’ financial circumstances. We will continue to work closely with the sector as it evolves.”