“Buy now, pay later” loans make it harder to process credit

Payment history often goes unreported

BNPL companies typically do not report to credit scoring companies when consumers use these loans. This makes it difficult for lenders to keep track of consumer loan balances.

“This makes a big difference in how much you should borrow,” said Kenneth Lin, CEO of fintech firm Credit Karma. “Often, the credit system doesn’t really know how much you owe in a buy-now-pay-later scenario.”

Consumers with multiple BNPL loans with multiple payment dates can find themselves in a debt spiral. “That’s when people get into serious trouble,” Lin said.

Difficult to build credit history

The impact of late payments varies

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