Buy now pay later (BNPL) credit is a way for you to buy goods and services now and pay for them later. This credit is usually interest-free and often available for online purchases. It’s also increasingly available in high-street stores.

There’s nothing new about BNPL. But we’ve recently seen a rapid increase in the number of people using short-term BNPL. Typically, with these deals you don’t have to pay for goods for up to three months after you’ve bought them, and sometimes you can pay back the money in instalments. With longer-term BNPL you often have up to 12 months before you have to start paying for the goods.

Like any form of credit, if you manage BNPL responsibly it can be a useful way of spreading the cost of things you buy. You need to make sure you don’t borrow more than you can afford to repay and that you make any agreed payments on time and in full. If you miss payments this could result in penalty charges and affect your credit record.

Credit reports have included some BNPL accounts for quite a while. But the newer short-term BNPL credit deals (known as ‘deferred-payment credit’ accounts) have not been routinely reported to the credit reference agencies and used to work out your credit score. This is now changing.

This means credit reference agencies will start to include details of any short-term BNPL deals you take out in your credit report. Lenders and credit reference agencies will then look at how to factor this information into your credit score, which may take around 12 to 18 months. This is to allow credit reference agencies and lenders time to fully analyse this new information and update their credit scoring systems.

It’s important that lenders have a comprehensive picture of all your credit commitments. This helps them accurately assess your financial circumstances and your ability to manage any further borrowing.

Some people only have a limited credit history. This can make it hard for them to get affordable credit. Including short-term BNPL accounts on credit reports could help strengthen their credit history, provided they manage this credit well.

BNPL lenders are expected to start sharing this information with credit reference agencies quite soon so this information should start appearing on your credit report before the end of the year.

It will be the same sort of information as is listed for any other credit you have. It will include when the account was opened, the monthly repayments, any credit limit, the current balance and how you are managing the payments.

For regular users of short-term BNPL credit, if you are repaying each purchase independently and within three months, each purchase should appear on your credit report as a separate, short-term ‘deferred payment credit’ account.

If you fall behind with your payments this will be recorded. If you fall behind with your payments for 90 days or more then the account may be reported as ‘defaulted’. When this happens the account is typically passed to the lender’s debt collections team or an outside collections firm. A defaulted account will stay on your credit report for six years.

Yes. Each time a lender carries out a credit check on you because you’ve asked for credit, a new credit-application search is likely to be registered on your credit report. BNPL searches will be visible to other lenders but will be excluded from your credit score for 12 to 18 months. This is to allow credit reference agencies and lenders time to fully analyse this new information and update their credit scoring systems.

We keep all searches on your credit report for one year.

We expect this to happen later this year.

Lenders typically look at several factors to assess your creditworthiness, including your payment history, how much you’ve borrowed and if you’ve taken out other credit recently.

As with any type of credit, borrowing beyond your means and missing repayments are likely be viewed negatively. But if you have managed credit well in the past this is likely to be viewed positively.

Not this year. Once the information is added to credit reports, it’s likely to take 12-18 months for credit reference agencies and lenders to update their credit scoring systems.