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Buy now pay later bad credit

Should I use buy now pay later with a bad credit score?

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Written by  Ella Jukwey
5 min read
Updated: 15 Sep 2023

Buy now pay later allows you to make purchases but pay for it at a later date. But can you use a payment plan like this if you’ve got a poor credit rating? We take a look...

What is buy now pay later?

Shopped online recently? You may have spotted the option to pay in instalments at the checkout – known as buy now pay later (BNPL). This payment method is a way to buy items on credit and pay for them further down the line. There are several buy now pay later providers on the market, from Klarna to ClearPay, allowing you to spread the cost of your purchase over a time, usually in a few months.

While MoneySuperMarket doesn't offer BNPL, it’s become a popular way to pay at the checkout, particularly for young people, both online and in store. 

Young woman using laptop

Can I use buy now pay later without having a credit check?

In most cases, BNPL providers will carry out a ‘soft credit check’ before they approve you to use their service. This means they’ll search your credit record to decide whether to accept you for a BNPL purchase, without leaving a ‘footprint’ on your credit file or affecting your credit score.

But by not performing a ‘hard’ credit check lenders can’t make a full assessment of your debts and may lend to you when you can’t afford to pay the money back, which can be risky if you’re applying for other credit like a credit card or a loan. 

Will I be accepted for buy now pay later with bad credit?

You may find it more difficult to be accepted for buy now pay later if you’ve had debt problems in the past and you've got a low credit score. This is because your credit score is a reflection of how well you’ve handled credit and borrowing in the past, so if you’ve struggled with bad credit, the BNPL provider may be reluctant to approve you.

But BNPL providers don’t always check your credit history and rating in full – instead, they usually perform a ‘soft search’, rather than looking in more depth at your credit history. So, this may mean that if you’ve had debt problems in the past and have a low credit score, you may still be accepted for BNPL at the checkout.

Not sure if you have bad credit? It’s a good idea to keep an eye on your credit score and check it before you apply for buy now pay later. You may find ways to improve your credit score beforehand with Credit Monitor – our free service that lets you keep track of your credit rating, with handy tips to improve it.  

Is it a good idea to use buy now pay later if I have a poor credit score?

Whether using buy now pay later is a good idea if you have a poor credit score will depend on your circumstances, how you use the card and if you pay back what you’ve borrowed in good time. As long as you meet your scheduled repayments in good time, your credit score may gradually improve.

Using buy now pay later could suit you if:

  • You meet your repayments: As long as you pay off what you owe each month, your credit score may improve over time. It may help to set a reminder on your phone to repay what you owe so you don’t forget your repayments. You’ll also avoid late fees and high-interest charges

  • You don’t overspend: Remind yourself that when you use buy now pay later, you need to pay the money back. Make sure not to spend what you can’t afford to repay – if you buy more than you can afford through BNPL and miss repayments, your provider may pass this on to credit reference agencies which will be recorded on your credit file

Using buy now pay later might not suit you if: 

  • You’re struggling financially: If you’re struggling to meet other debt repayments right now, using buy now pay later may put further strain on your financial situation 

  • You could lose track of repayments: If you’ve missed debt payments in the past, either been unable to pay or have simply forgotten, then BNPL could be risky as there are big penalty fees for late payments

What is the Government regulation around buy now pay later?

In 2022, the Government introduced new rules for buy now pay later. Here’s a breakdown of the changes brought in:

  • Affordability checks: Lenders now have to carry out affordability checks. This means they must ensure loans will be affordable for consumers 

  • Financial promotions: Buy now pay later adverts must be ‘fair, clear and not misleading’ 

  • Approval and complaints: Lenders offering buy now pay later products must be approved by the Financial Conduct Authority. Borrowers can make a complaint to the Financial Ombudsman Service

Will making BNPL payments improve my credit score?

Using buy now pay later could affect your credit score, but not always negatively.

If you buy more than you can afford through BNPL and start missing payments, the provider may pass on this information to the credit reference agencies and it will be recorded on your credit file – and could harm your credit score. Whereas if you have a low credit score or haven’t borrowed in the past – perhaps because you have just turned 18 – then showing you can handle credit responsibly through buy now pay later could boost your credit score. But only if you choose a BNPL plan where the provider will record information with the CRAs – so it goes on your credit file. And not all providers do this.

If this is something that is important to you – check with the BNPL provider before signing up to a payment plan. 

How else can I access credit with a bad credit score?

Not sure if buy now pay later is the right wayto borrow for you? There are other ways you can access credit with a bad credit score. MoneySuperMarket does not offer any BNPL products, however, here are some borrowing options for you if have bad credit:

  • Save up and buy later: Is the purchase you want necessary right now or more of an impulse buy? If it’s the latter, consider putting the money to one side bit by bit and paying for it outright when you have enough saved. Doing so can help build a savings habit and stop you from taking on more debt – which can risk further damage to your credit rating if things go wrong and you struggle to pay it back

  • Credit-builder credit card: Credit-building credit cards are credit cards specifically designed to allow you to borrow and have the chance to improve your credit score. They typically offer higher interest rates and lower credit limits, and it’s important to pay off the outstanding balance in full each month to avoid heavy interest charges. But if you use them responsibly they can help boost your credit rating so you can apply for credit at lower rates of interest in the future 

  • Credit unions: Credit unions provide loans, savings accounts and current accounts to more than one million people across the UK. A credit union loan is based on an affordability assessment, which means you can pay back the money at a rate you can afford. It may be a cheaper way of borrowing than from other high street lenders. In some cases, you may need to save small amounts with the credit union to be accepted for a loan. Many credit unions operate in specific geographical areas

  • Loans: While you might not be offered the best rates on borrowing, some lenders do offer personal loans for those with poor credit ratings. You could also take out a secured loan which lets you put down anexpensive item like a house or car as security, so the lender knows they can get their money back if you stop making repayments. Irrespective of the type of loan you choose, if you keep up with payments you could boost your credit score. However, if you miss loan repayments, you run the risk of damaging your credit rating

What types of products and services can you purchase with a buy now pay later scheme? 

Buy now pay later (BNPL) can be used to pay for a variety of goods and services, such as: 

  •  Clothing: You can use BNPL to pay for new clothes, with many online retailers accepting Klarna  

  • Holidays: There are specialist BNPL providers which allow you to pay for holidays in monthly instalments 

  • Bills and essentials: You could pay off your bills and buy everyday essentials with this payment option, but it’s important to make sure you can keep up with payments 

  •  Anything else: There are some BNPL providers who will offer you a card that you can use to make payments. Check with the BNPL card issuer where the cards are accepted and any associated fees 

How do you pay off buy now pay later purchases? 

When you use BNPL as a payment form you make an agreement with the provider to make payments within a certain timeframe. Popular buy now pay later provider Klarna offers two ways to make payments.   

With Klarna you can pay in three interest-free instalments, with the first payment made instantly and the remaining instalments automatically taken from your payment source every 30 days.  Klarna also offers a pay in 30 days option, where you can pay up to 30 days later. 

Other useful guides

Interested in reading more around borrowing with a low credit score? Here are some similar guides:

Compare credit cards with MoneySuperMarket

Looking for a way to build your credit score? A credit-builder credit card can give your credit score a boost over time. You’ll have a smaller credit limit – and if you can pay off your balance each month you should start to see your credit score improve.

Finding the right credit card is easy when you compare with MoneySuperMarket. First, you’ll need to tell us a little about yourself and your financial situation, including information on your employment, income and what you’ll be using your new credit card for.

From there, you’ll receive a list of credit cards that match your needs. We’ll even show you which cards you’re most likely to be accepted for if you apply with our credit card eligibility checker. This way you reduce the risk of being rejected and further damaging your credit rating.

Once you’ve found the card you want, just click through to the provider to finalise your application. 

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

Frequently asked questions

Am I more likely to be accepted for buy now pay later than a credit card if I have bad credit?

It’s hard to judge whether you’re more likely to be accepted for BNPL than a credit card when you have bad credit. Your likelihood of being accepted will depend on a range of conditions and will be up to the buy now pay later provider or the policy of the credit card issuer. Different providers will have different criteria and thresholds.

Some BNPL providers may be hesitant to let you use their service if you have bad credit. Equally, you could be declined for a credit card or not offered the best rates.

Is buy now pay later always interest free?

While many buy now pay later offers are interest-free, sometimes for up to 12 months, it will depend on which scheme you sign up to.

For example, if you choose to pay in instalments, you might find interest is included upfront making the overall amount you pay higher than if you’d bought the item outright.

BNPL can become very expensive if you miss a payment and get charged late fees and interest. This can soon make your debt much larger.

What is the impact of having a bad credit score?

Having a low credit score doesn’t just mean you could be turned away from buy now pay later purchases, it can affect you at any time when you might need credit, such as getting a new mobile phone contract or applying for a first mortgage.

A bad credit score can mean you’re offered higher interest rates on a mortgage or have less choice of lender, when you want to borrow money to buy a house. It could mean you are turned down for a personal loan, or credit card, or offered one at a higher rate of interest.

How can I improve my credit score quickly?

While there is no instant fix to improve your credit score quickly, there are some ways you can give your credit score a boost. Making sure you’re on the electoral roll, checking your credit report for accuracy (and any errors), paying your bills on time and not using all credit available to you can help to improve your credit rating. Take a look at our guide on how to improve your credit score for details. 

Can I use buy now pay later to pay for my bills?

There are buy now pay later companies which allow you to use the payment option to cover your bills. However, using BNPL for this is best avoided. It’s important to remember that BNPL can come with hefty payment fees and that you don’t choose the dates when you can pay the money back. Using BNPL to pay for your bills could make your financial problems pile up.

Can I get instant approval on buy now pay later if I have bad credit?

You might be able to but having a low credit score will make it harder.

How do retailers process buy now pay later purchases? 

When a customer signs up for BNPL, they’ll have to fill out an online eligibility form to get an instant approval decision. The approval process is quick and once the customer has been accepted, the retailer will be paid in full by the BNPL provider. Then the customer will have to pay the BNPL provider in instalments.  

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