Is Your Buy Now, Pay Later Habit Affecting Your Mortgage Chances?
Using buy now, pay later (BNPL) services could be damaging your chances of securing a mortgage, brokers have warned. Despite having a "perfect credit score," some borrowers with a few BNPL transactions have been rejected by lenders, according to an exclusive survey shared with the Money blog.
Impact of BNPL on Mortgage Applications
Several brokers reported that a client’s frequent use of BNPL services influenced their refusal by high street lenders. This suggests that the presence of BNPL payments on a credit file might negatively affect how lenders assess prospective borrowers.
Brokers Call for Change
Brokers have urged lenders to reconsider how they evaluate BNPL activity within credit reports to avoid unfair rejections.
"A client's regular use of BNPL services was a factor in their rejection by a high street lender."
BNPL Companies Respond
In reaction to these findings, two leading BNPL companies defended their services, describing them as innovative and suggesting that other financial sectors should adapt to this new way of payment.
What Is Buy Now, Pay Later?
BNPL schemes allow customers to spread the cost of their purchases without paying interest. Nearly 11 million people in the UK use these services, according to the Financial Conduct Authority.
Author’s summary: Frequent use of buy now, pay later services may harm mortgage approval chances, prompting calls for lenders to update how they assess BNPL activity on credit files.