How Buy Now, Pay Later Destroyed This 34-Year-Old Man’s Credit Score
The cost of living is rising. Inflation is at its highest in 30 years. And it hurts young women, who face historically high housing and living costs. Enter: buy now, pay later (BNPL) – a phenomenon that allows young people to buy things they cannot afford. Thirty-nine percent of R29 readers say they have used a buy now, pay later service. Is this a radical initiative to help young people manage your money and buy what they want (as providers claim) or a way to get young people to debt spending lightly? Refinery29 is investigating. In our series pay for itthis week we will hear from the women who use BNPL’s services.
Aanya*, 34, is a mother of one child. She works in marketing and lives in North London with her husband. She says that buy now, pay later (BNPL) destroyed her credit score. The most infuriating thing about it? She actually used it as payment by accident. That was seven years ago and she is still dealing with the fallout today.
“I was on the H&M site buying baby clothes for my daughter as I was pregnant with her. I had no intention of using BNPL to pay but, at that time- there, the way the website and payment method were set up meant that the first payment choice you were offered was Klarna,” says Aanya.
Aanya didn’t really understand what BNPL was but she wanted the clothes so, she says, she thought, “I’ll go ahead and pay.”
The baby clothes Aanya bought that day cost around £300 in total. She did not need to use the credit to make the purchase and would not have considered doing so if the BNPL payment option had not been presented to her. This meant she had to pay £50 once a month for six months.
“Annually I make between £30,000 and £40,000,” she continues, “so buying the baby clothes was no problem. I never relied on credit cards or loans. I don’t I didn’t need to split the payment.
The problems started very soon after buying Aanya. “Obviously, I didn’t fully understand how the BNPL device worked. I received a follow-up email and it didn’t seem very clear to me,” she explains. “I kept getting emails and I think I had also received a letter, but I actually thought it was an advertisement because it looked like a catalog with pictures.”
Aanya realized something had gone wrong a month later when she checked her credit rating and realized she had dropped out. “My credit rating was down 200 points,” she says. “I was horrified. I’m very organized and I try to stay on top of these things because I don’t like the feeling of being in financial trouble because I don’t have British citizenship, so I try to have the best behavior at all times.Whether it’s rational or not, i’m worried about my visa!
Panicked, Aanya couldn’t understand what was going on so she dug. “I looked further into what had happened to my credit rating and learned that I had missed a Klarna payment,” she explains. “At first I thought it was a scam, but realized it was buying H&M BNPL.”
I think “buy now, pay later” programs encourage women who are not financially literate to shop around.
On its website, Klarna states that its BNPL program only impacts your credit score if you miss a payment. The most frustrating thing for Aanya was that she could afford to pay the full amount immediately. Nevertheless, the credit rating she had worked hard to build was trashed.
“I didn’t have any financial hardship so I didn’t need BNPL, but how it was all communicated to me was confusing,” she says.
Aanya paid but since meeting with BNPL she has continued to have problems getting credit.
“I had trouble getting mobile phone contracts and problems with mortgages,” she says. “Obviously it shows on my credit report that I used BNPL and the mortgage companies don’t like that. They said the fact that I missed such a small payment suggested I couldn’t afford a mortgage.
As a refinery29 reported in 2021, young women are seeing their mortgage applications refused because their bank statements show that they have used BNPL schemes, even if they have not missed any payments.
Aanya called the rating agencies and tried to have the missed payment removed from his records. He was told that was impossible and that the missed payment would remain on his credit score “for at least six years”.
“I was super pissed off. I was really angry. It was a stupid mistake on my part,” she says. our ability to buy a house together.”
BNPL is more mainstream now. Aanya says that if she had known more, maybe she wouldn’t have fallen victim to what, as she puts it, appeared to be a “marketing offer”.
“I think the BNPL’s schemes are wrong,” Aanya concludes. “I think it plays with people’s financial vulnerability and their lack of knowledge about money. The fact that you can make such a small mistake like I did and have it follow you around for years seems so unfair. I don’t think the way BNPL is marketed is fair, it seems targeted at people who have no knowledge of finance because I guess these companies make money if they get it wrong. It also seems to be aimed primarily at women – buy that little top or that little dress, don’t worry. I think it encourages women who are not financially literate to shop around. I think it should be properly regulated or at least limited to things like essentials.
Ultimately, Aanya says that using BNPL caused her an untold amount of stress and anxiety. “If I, someone who doesn’t struggle financially, can go through this, I just wonder how people must feel struggling to make ends meet.”
At the time of writing, Klarna is not a default payment method on the H&M site. Since Aanya’s contact with Klarnathe company has come out in favor of regulation of the BNPL sector.
*Name changed to protect identity