Klarna and your credit report: how buy now pay later will impact your rating

Klarna logo is seen on smartphone in front of displayed Pricerunner logo in this illustration taken on November 2, 2021. REUTERS/Dado Ruvic/Illustration
Klarna will start to report the use of buy now pay later products to UK credit reference agencies from June. Photo: Dado Ruvic/Reuters

Swedish fintech Klarna will start providing information to UK credit agencies on the use of buy now, pay later services, in a move that could affect shoppers’ credit ratings from 2023.

Klarna, which has around 16 million customers in the UK, will report consumer purchases paid on time, late payments and unpaid purchases for “pay in 30” and “pay in three” orders made on or after June 1 to Experian and TransUnion.

This will allow credit card companies to see transactions and debts when conducting formal checks on potential borrowers.

Read more: Buy now, pay later firm Klarna launches payment card in the UK

However, debts and repayments will only start affecting customer credit scores after 18 months, meaning the change will not have any formal impact until the end of 2023.

It said other changes previously announced include updated text at checkouts to make it clear that BNPL options are credit products, with consequences for missed payments, and the introduction of an internal complaints adjudicator.

David Beard, editor-in-chief of, said: “This is good news for customers who are responsible users of Klarna because it means they’ll be able to build their credit rating using the service, but bad news if you’ve ever used Klarna and haven’t paid what you owe them on time.

“If you’ve ever been late paying what you owe Klarna, from June, your credit score may be negatively impacted, meaning you might find it more difficult to be approved for financial products in the future, including for things like mobile phone contracts, credit cards, loans and mortgages."

BNPL providers, like most lenders, are not currently required to share information with credit agencies, which collate data from banks and other credit providers.

While BNPL products can help people avoid paying interest on their borrowing, concerns have grown as people may rapidly build up debts through using them as an option at online checkouts.

The Woolard Review previously found the use of buy now, pay later products nearly quadrupled in 2020, amounting to £2.7bn.

Research from loan provider Creditspring published last month claimed that more Britons had borrowed through buy now, pay later services since the start of 2021 than taken out traditional debts such as bank loans or mortgages.

Jenny Ross, Which? Money editor, said: “Using buy now pay later is an easy and convenient way to pay for millions. However, with currently little to no information or warnings about the risks of incurring late fees or getting into debt, it raises concerns that many shoppers do not fully understand the products they’re using.

“BNPL providers’ move to work with credit reference agencies to report customer BNPL usage and missed payments is a step in the right direction, as it could help mitigate the risk of consumers taking on more BNPL credit than they can afford.

Read more: Buy now, pay later firms to refund fees as watchdog cracks down

“However, this does not remove the urgent need for Government regulation of all BNPL firms to follow as quickly as possible to ensure users are properly protected.”

The company said it had worked with the agencies over the past two years to update their systems to process BNPL data.

Alex Marsh, head of Klarna UK, said: “It is alarming that UK consumers are still being forced to take out high-cost credit cards to demonstrate they can use credit responsibly and build their credit profile. That will start to change on 1 June this year as the vast majority of the 16 million UK consumers who make Klarna BNPL payments in full and on time will be able to demonstrate their responsible use of credit to other lenders.”

Payments made through Klarna Financing in the UK are already reported to credit reference agencies.

Watch: The risks of buying now and paying later