Can Buy Now, Pay Later Plans Help You Build Credit?
BNPL is a popular way to buy everything — and some loans are starting to show up on credit reports.


Apple recently announced that loans made through its buy now, pay later program will be reported to Experian, a major credit reporting company. If more lenders follow Apple’s lead, the change could help consumers who use these loans build a credit history — but it could hurt their credit scores, too.
BNPL services allow consumers to spread payments on their purchases over a few weeks or months, typically without interest if payments are made on time. Unlike layaway plans of the past, which required buyers to wait to claim a purchase until they had paid it off, BNPL provides instant gratification, which has made the loans popular with consumers. More than 40% of U.S. adults have used at least one BNPL service, according to a survey by Bankrate.
However, the simplicity of BNPL plans can obscure potential pitfalls. Fees for late payments can be steep, and consumer advocates worry that the easy availability of the loans encourages consumers to purchase things they can’t afford. Nearly 30% of consumers who have used BNPL said they have spent more than they should, according to the Bankrate survey.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Because BNPL payments usually aren’t reported to the three major credit reporting companies — Equifax, Experian and Trans-Union — consumers have less incentive to curb spending and pay on time (although if you fail to pay for an extended period, the BNPL provider may turn your debt over to a debt collector, which can heavily damage your credit). At the same time, with most BNPL providers, using your loan responsibly doesn’t help you build a good credit history.
So far, most other BNPL providers, including Klarna and Afterpay, haven’t announced plans to report their loans to the credit reporting companies. Affirm says it reports some longer-term loans to Experian, but it doesn’t report its plans that offer four interest-free payments, a common BNPL structure.
In addition, most credit scoring models haven’t adapted to incorporate the way BNPL payments are made. For example, unlike credit card payments, which are typically made once a month and are reported to the credit reporting companies, many BNPL borrowers make small, biweekly payments.
While Apple BNPL payments will appear on Experian credit reports, the information won’t be factored into borrowers’ credit scores, Experian says — and a credit score is a key measure that lenders use to judge a potential borrower’s creditworthiness for a credit card, mortgage or other loan. Experian says that BNPL loan information may factor into credit scores in the future “as new credit scoring models are developed.”
For now, while BNPL services provide a convenient way to spread out payments, consumers shouldn’t rely on them to develop a positive credit history. The most effective way to build credit is to apply for a credit card, pay your bills on time and keep the balance to less than 20% to 30% of the card’s limit.
BNPL pitfalls
None | 44% |
Overspent | 29% |
Difficulty obtaining a purchase/refund | 18% |
Regretted a purchase | 17% |
Dissatisfied with purchase or experience | 17% |
Other | 1% |
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Ashlyn Brooks is a financial writer and former civil engineer. She's on a mission to show others how to save and spend smarter through purposeful money habits. Her work has been featured on Investopedia, Bankrate and Yahoo Finance.
-
Do You Need a Family Office? Four Signs for the Very Wealthy
You may need a family office if you are a high-net-worth individual, because being wealthy turns a family into a family business.
-
Wealth Advisers: In Estate Planning, the End Is Just the Beginning
We need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.
-
Stood Up by a Radio Show: But Was It a Breach of Contract?
A conscientious financial planner reschedules his clients after being invited onto a talk show and ends up losing one of them at a cost of $5,000. What does the radio show owe him, if anything?
-
Over 50 and Still Paying Student Loans? Here's Some Help
It's the club no one wants to join. But if you are over 50 and still paying student loans, there are ways to tackle both debt and retirement savings.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth
Consistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
Baby Boomers vs Gen X: Who Spends More?
Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
The 401(k) Mistake That Could Cost You Millions in Retirement Savings
Thinking about reducing your 401(K) contributions in the current market? Here are six reasons why you may want to reconsider.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid Off
Life insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
7 Rules Frequent Flyers Swear By
From dodging long lines to avoiding bad coffee, these clever travel rules can help you save time, stay healthy and reduce stress every time you fly.