Is Your Buy Now, Pay Later Habit Hurting Your Mortgage Chances?
Using buy now, pay later (BNPL) services may negatively affect your ability to secure a mortgage, mortgage brokers caution.
According to an exclusive survey for the Money blog, even borrowers with a "perfect credit score" and only "a few" BNPL transactions have been turned down by lenders.
“A client’s regular use of BNPL services was a factor in their rejection by a high street lender,” brokers reported.
Several brokers are urging lenders to reconsider how they assess potential borrowers whose credit files show BNPL activity.
In response, two of the major BNPL companies defended their practices, stating that they offer innovative financial tools and that traditional lenders need to modernize their approach.
What Is BNPL and How Do Lenders Use the Data?
BNPL plans enable customers to divide purchase costs into several interest-free payments. The Financial Conduct Authority estimates nearly 11 million Britons now use these services.
Summary
Regular BNPL usage could lower mortgage approval chances, prompting debate between lenders and BNPL providers over fair credit assessment.