Is Your Buy Now, Pay Later Habit Harming Your Mortgage Chances?
Financial brokers warn that regular use of buy now, pay later (BNPL) services might reduce your likelihood of securing a mortgage.
Mortgage intermediaries told the Money blog that even borrowers with what they described as a "perfect credit score" have faced rejections after making a few BNPL transactions.
"Several brokers told us a client's regular use of BNPL services was a factor in their rejection by a high street lender."
Specialists are urging lenders to reconsider how they assess borrowers who have BNPL activity recorded on their credit reports, suggesting that current evaluations may be too strict.
Meanwhile, two major BNPL companies responded, arguing that their platforms offer innovative and useful solutions, and that traditional lenders need to modernize their approaches to customer credit behavior.
What Is BNPL and How It Works
Buy now, pay later programs let shoppers divide payments on purchases without interest. These plans have become highly popular, with nearly 11 million people in the UK using them, according to the Financial Conduct Authority.
Related Information
- Many users consider BNPL tools a budgeting aid rather than traditional credit.
- Lenders, however, view frequent installments as potential signs of financial overextension.
Author’s summary: Regular BNPL usage, while convenient, might lower your mortgage approval chances unless lending criteria evolve to reflect modern spending habits.