Last reviewed: June 2026 | Source: Financial Conduct Authority and HM Treasury
TL;DR- Buy now pay later, or BNPL, lets shoppers split a purchase into instalments, often interest-free.
- Some BNPL providers now report account activity to credit reference agencies, so usage can appear on your credit file.
- Missed BNPL payments can damage a credit score and lead to collection action.
- Most BNPL purchases do not carry Section 75 protection, leaving a gap if something goes wrong.
- The government and the FCA are bringing BNPL into formal regulation, which will add affordability checks and complaint rights.
Key Facts
●Common providers: Klarna, Clearpay and similar instalment services
●Typical structure: Purchase split into several interest-free instalments
●Credit reference reporting: Some providers now report to agencies such as Experian
●Section 75 protection: Generally does not apply to interest-free BNPL
●Future regulation: BNPL being brought under FCA regulation by HM Treasury
●Affordability checks: Set to become a formal requirement under regulation
Buy now pay later has grown rapidly as a way to spread the cost of online and in-store purchases, usually without interest. For a long time it sat largely outside the consumer credit rules that govern credit cards and loans, but that is changing. The government and the regulator are bringing BNPL into formal regulation, and some providers have already begun reporting usage to credit reference agencies. This guide explains how BNPL affects a credit file, where its consumer protections fall short, and what the regulatory changes mean.
How buy now pay later works
Buy now pay later products let a shopper split the cost of a purchase into several instalments, commonly interest-free if paid on time, or defer payment for a short period. Providers such as Klarna and Clearpay integrate with online checkouts and apps so the option appears at the point of sale, making it quick and easy to use.
The provider pays the retailer in full and then collects the instalments from the customer. Because the arrangement is usually interest-free when payments are made on schedule, the cost to the shopper can be nothing extra, which is part of its appeal compared with traditional credit.
The simplicity that makes BNPL attractive can also make it easy to take on several arrangements at once across different retailers, which can be harder to keep track of than a single credit card balance. Late or missed payments can attract fees and, increasingly, consequences for the customer's credit record.
How BNPL appears on your credit file
Historically, much BNPL activity did not appear on credit files, but that has been changing. Some providers now share account information with credit reference agencies, so the existence of BNPL accounts and how they are managed can become visible to other lenders looking at the file.
This means responsible use, with payments made on time, can in some cases contribute positively, while missed payments can show as negative entries. The precise treatment depends on the provider and the agencies it reports to, and not all BNPL activity is reported in the same way.
Because reporting practices are still developing, customers should not assume their BNPL use is invisible to lenders. A mortgage or loan assessment may take account of BNPL commitments where they appear on the file or are disclosed, and multiple active arrangements can affect how a lender views overall affordability.
What happens if you miss payments
Missing a BNPL payment can trigger late fees, depending on the provider, and can lead to the account being passed to a debt collection process if the balance remains unpaid. Where the provider reports to credit reference agencies, a missed payment can also appear as an adverse entry on the credit file.
Adverse entries can affect future applications for credit, including products that have nothing to do with the original purchase. This is a significant shift from the early days of BNPL, when missed payments were less likely to feed through to a credit record.
Anyone struggling to meet BNPL instalments should contact the provider early, as forbearance options may be available, and seek free debt advice if commitments are becoming unmanageable. Treating BNPL as a form of borrowing rather than a payment convenience helps avoid the consequences of falling behind.
The Section 75 protection gap
Section 75 of the Consumer Credit Act gives credit card users protection by making the card provider jointly liable with the retailer for purchases between certain values, which is valuable if goods are faulty or a retailer fails. Interest-free BNPL generally does not carry this protection, because of how the products are structured.
This creates a protection gap: a customer who buys an item with a credit card may have a route to a refund through the card provider if something goes wrong, while the same purchase made through BNPL may not. Chargeback rights may apply where a debit card funds the instalments, but these are weaker than Section 75.
Shoppers using BNPL for higher-value purchases should be aware that they may have less recourse if the goods are defective or the retailer becomes insolvent. The lack of Section 75 cover is one of the consumer concerns that has driven the move toward regulating the sector.
Affordability checks and responsible lending
Traditional consumer credit comes with affordability assessments designed to check that a borrower can repay, but early BNPL often involved only light checks. As the sector grows, providers and regulators have focused on ensuring that customers are not taking on instalment commitments they cannot afford.
Under the planned regulation, affordability checks are expected to become a formal requirement, bringing BNPL closer to the standards that apply to other forms of borrowing. This is intended to reduce the risk of customers accumulating multiple arrangements that together become unaffordable.
For consumers, this means BNPL applications may involve more scrutiny in future, including checks that draw on credit reference data. While that may make approval less automatic, it is intended to protect customers from over-committing.
FCA regulation of the sector
The government has confirmed that buy now pay later will be brought under the regulation of the Financial Conduct Authority, following consultation by HM Treasury and the regulator. Regulation is expected to introduce requirements such as affordability checks, clearer information for customers and access to the Financial Ombudsman Service for complaints.
Bringing BNPL within the regulatory perimeter aligns it more closely with other consumer credit products and gives customers formal rights if things go wrong. The exact rules and timing have been the subject of consultation, so the detail continues to develop.
Once regulation is fully in force, customers should benefit from stronger protections and clearer complaint routes, while still being able to use BNPL where it suits them. Until then, it remains important to treat BNPL as borrowing, keep track of instalments and understand the more limited protections that currently apply.
Frequently Asked Questions
Does buy now pay later affect my credit score?
It can. Some BNPL providers now report account information to credit reference agencies, so the existence of BNPL accounts and how you manage them can become visible on your credit file. Payments made on time can in some cases contribute positively, while missed payments can appear as adverse entries that affect future applications. Reporting practices vary by provider, so you should not assume BNPL use is invisible to lenders.
Do BNPL purchases have Section 75 protection?
Generally no. Section 75 of the Consumer Credit Act protects many credit card purchases by making the provider jointly liable with the retailer, but interest-free buy now pay later usually does not carry this protection because of how the products are structured. Chargeback rights may apply where a debit card funds the instalments, but these are weaker than Section 75, leaving a protection gap on higher-value purchases.
Is buy now pay later regulated in the UK?
Buy now pay later is being brought under the regulation of the Financial Conduct Authority following consultation by HM Treasury and the regulator. Regulation is expected to introduce requirements such as affordability checks, clearer customer information and access to the Financial Ombudsman Service for complaints. The exact rules and timing have been developing through consultation, so customers should check the current position when using these products.
What happens if I miss a buy now pay later payment?
Missing a BNPL payment can lead to late fees depending on the provider, and if the balance stays unpaid the account can be passed to a debt collection process. Where the provider reports to credit reference agencies, a missed payment can also appear as an adverse entry on your credit file and affect future credit applications. Contacting the provider early and seeking free debt advice can help if you are struggling to keep up.
